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The Oregon Administrative Rules contain OARs filed through October 15, 2014
 
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DEPARTMENT OF CONSUMER AND BUSINESS SERVICES,
DIVISION OF FINANCE AND CORPORATE SECURITIES

 

DIVISION 25

SECURITIES EXEMPT FROM REGISTRATION

441-025-0005

Self-Executing Registration Exemptions

(1) The securities listed in ORS 59.025 are exempt from registration or notice filing requirements. Sales of securities listed in 59.025 may only be effected through licensed persons, unless a person is otherwise exempted by statute or rule. No filing or fee is required to utilize any registration exemption in 59.025.

(2) Persons relying on exemptions from registration have the burden of proof, pursuant to ORS 59.275, in establishing the availability of an exemption.

Stat. Auth.: ORS 59.285
Stats. Implemented: ORS 59.025, ORS 59.195 & ORS 59.275
Hist.: FCS 7-2000; f. & cert. ef. 6-2-00

441-025-0010

Exchange Exemption

The following exchanges are recognized by the Director for the purpose of the exemption from registration in section (4) of ORS 59.025:

(1) Chicago Board Options Exchange.

(2) Philadelphia Stock Exchange, Inc. only to the extent of securities of issuers who qualify under Tier 1 listing and maintenance requirements of the Exchange

Stat. Auth.: ORS 59.025(4) & ORS 59.285
Stats. Implemented: ORS 59.025(4)
Hist.: CC 32, f. & ef. 9-1-76; Renumbered from 815-030-0021; FCS 10-1994, f. & cert. ef. 10-3-94; FCS 7-2000; f. & cert. ef. 6-2-00

441-025-0020

Manual Exemption

Securities maintaining the following ratings by publishers of securities manuals are approved for the purpose of the exemption from registration in subsection (5) of ORS 59.025:

(1) Ratings of BBB or better for debt securities, and ratings of F-3 or better for commercial paper by Fitch Investors Service, Inc.

(2) Ratings of Baa or better for debt securities and ratings of P-3 or better for commercial paper by Moody's Investors Service.

(3) Ratings of BBB or better for debt securities and ratings of A-3 or better for commercial paper by Standard and Poor's Corporation.

Stat. Auth.: ORS 59.285
Stats. Implemented: ORS 59.025(5)
Hist.: CC 13, f. 9-19-73, ef. 10-1-73; Renumbered from 815-030-0025.5; CC 1-1978, f. & ef. 1-4-78; Renumbered from 815-030-0020; FCS 4-1990, f. & cert. ef. 8-21-90; FCS 7-2000; f. & cert. ef. 6-2-00; FCS 9-2001, f. & cert. ef. 9-28-01

441-025-0030

Employee Benefit Plans

The terms of an employee benefit plan are fair, just, and equitable for the purposes of ORS 59.025(12)(b) if it is a plan of an employee-owned enterprise.

Stat. Auth.: ORS 59.285
Stats. Implemented: ORS 59.025(12)
Hist.: FSC 3-1987(Temp), f. 9-24-87, ef. 9-28-87; FCS 5-1988, f. 3-22-88, cert. ef. 3-25-88; Renumbered from 815-030-0021.1; FCS 7-2000; f. & cert. ef. 6-2-00

441-025-0040

Charitable Securities

(1) A person may offer and sell Charitable Remainder Annuity Trusts, Charitable Remainder Unitrusts, and Pooled Income Funds and be exempt from the provisions of ORS 59.055 if:

(a) The person is exempt from federal taxation under the provisions of Section 501(c)(3) of the Internal Revenue Code; and

(b) The Charitable Remainder Trusts and the Pooled Income Funds qualify under the requirements of Section 664 or Section 642 of the Internal Revenue Code and all other applicable provisions and regulations thereof.

(2) The Director may by rule or order deny, condition, or withdraw this exemption if, in the Director's opinion, the availability of this exemption to a person would work a fraud or imposition upon the purchaser.

Stat. Auth.: ORS 59.285
Stats. Implemented: ORS 59.025(13)
Hist.: CC 25, f. & ef. 12-5-75; Renumbered from 815-030-0040; FCS 4-1990, f. & cert. ef. 8-21-90

441-025-0050

Additional Exempt Employee Benefit Plans

Pursuant to ORS 59.025(14), securities issued in connection with an employee benefit plan are exempt from registration if the plan:

(1) Is subject to or voluntarily complies with Title I of the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. §§ 1001-1191c;

(2) Meets the requirements of Section 403(b) of the Internal Revenue Code, 26 U.S.C. § 403(b); or

(3) Does not permit employee contributions.

Stat. Auth.: ORS 59.285
Stats. Implemented: ORS 59.025(15)
Hist.: CC 3, f. 10-2-69, ef. 10-25-69; Renumbered from 815-010-0010; CC 2-1978, f. 6-5-78, ef. 6-10-78; Renumbered from 815-030-0025; FCS 3-1987(Temp), f. 9-24-87, ef. 9-28-87; FCS 5-1988, f. 3-22-88, cert. ef. 2-25-88; FCS 4-1990, f. & cert. ef. 8-21-90; FCS 7-2000; f. & cert. ef. 6-2-00; FCS 1-2012, f. & cert. ef. 7-9-12

441-025-0060

Memberships in a Non-profit Cooperative

Pursuant to authority in ORS 59.025(14), the director exempts any certificate evidencing membership issued by a non-profit cooperative that meets all of the following criteria:

(1) The issuing cooperative is formed pursuant to ORS 62.800 to 62.815;

(2) The issuing cooperative owns or leases land in Oregon on which manufactured dwellings are or will be located;

(3) Only a natural person who owns and occupies a manufactured dwelling that is located on land owned or leased by the issuing cooperative may be issued a membership certificate;

(4) The issuing cooperative issues not more than one membership certificate for any space lease in the cooperative, regardless of the number of occupants in the manufactured dwelling located on the space.

(5) The issuing cooperative sets the price of membership at a reasonable level, not to exceed $1,000; and

(6) Each membership certificate includes a condition that requires the certificate must be returned to the cooperative in exchange for no more than the price originally paid by the purchasing individual upon termination of the individual’s membership in the cooperative.

Stat. Auth.: ORS 59.285
Stats. Implemented: ORS 59.025(14)
Hist.: FCS 1-2009, f. & cert. ef. 2-3-09

Renewable Energy Cooperative Corporations

441-025-0120

Definitions

For purposes of 441-025-0121 through 441-025-0124, the following definitions apply unless the context requires otherwise:

(1) “Accredited investor” has the same meaning as that term is defined under OAR 441-035-0010.

(2) “Capital stock” means a proportional part of a renewable energy cooperative corporation’s capital that may show a person’s respective interests in or entitlement to assets, reserves or dividends, if authorized by the articles of incorporation, but does not show a member’s right to vote in matters affecting the governance of the renewable energy cooperative corporation, unless authorized by applicable law.

(3) “Project” includes conducting studies as to the feasibility of a potential facility, as well as the planning, design, construction and operation of a discrete facility to generate electricity from renewable energy sources.

(4) “Renewable energy cooperative corporation” has the same meaning as that term is used in ORS 59.025.

(5) “Membership share” includes membership certificates and membership stock as defined in ORS 62.015, but does not include capital stock.

(6) “Well-defined community” means:

(a) One or more adjacent precincts, districts, cities, counties or other boundaries defined by the state or a unit of local government or by a state or local government agency; or

(b) Individuals with a common bond of occupation or association, including family members.

(A) With the approval of the Director, a well-defined community based upon a common bond or association may include individuals residing or working in the city or county where the renewable energy facility will be located or where the cooperative is headquartered.

(B) Approval for an enhanced community must be granted prior to any offer of membership or security interest to a member of the enhanced community.

Stat. Auth.: ORS 59.025 & 2014 OL Ch. 69 §2
Stat. Implemented: ORS 59.025 & 2014 OL Ch. 69 §1
Hist.: FCS 6-2014, f. & cert. ef. 10-6-14

441-025-0121

General Requirements for Renewable Energy Cooperative Corporations

(1) In order to rely on the exemption under ORS 59.025(12), a renewable energy cooperative corporation must:

(a) Have a certificate of existence issued by the Oregon Secretary of State pursuant to ORS 62.065 and be in good standing;

(b) Meet all the conditions set out in 441-025-0122;

(c) Provide the disclosures in the manner required by 441-025-0123; and

(d) Make any required filings under 441-025-0124.

(2) Reliance on ORS 59.025(12) does not preclude renewable energy cooperative corporations from relying on other exemptions under 59.025 or 59.035, as appropriate, for the offer or sale of membership shares, capital stock, or other authorized securities.

Stat. Auth.: ORS 59.025 & 2014 OL Ch. 69 §2
Stat. Implemented: ORS 59.025 & 2014 OL Ch. 69 §1
Hist.: FCS 6-2014, f. & cert. ef. 10-6-14

441-025-0122

Requirements for Reliance on Registration Exemption for Renewable Energy Cooperative Corporations

A renewable energy cooperative corporation relying on the exemption in ORS 59.025(12) is limited to the following actions in connection with the exempt offering:

(1) Admit individuals for membership into the cooperative, but may not admit legal entities or non-natural persons.

(2) Sell capital stock as permitted under ORS Chapter 62 and the renewable energy cooperative corporation’s articles of incorporation or bylaws.

(3) Raise up to $1,500,000 per project from non-accredited investors.

(4) Raise funds from non-accredited members that are part of a well-defined community.

(5) Allow a non-accredited member to contribute or invest no more than ten percent of the member’s liquid net worth in the purchase of membership shares or in the investment in a project of a particular renewable energy cooperative corporation.

(6) Place funds raised through the sale of membership shares or capital stock in escrow or impound the funds in an interest-bearing trust account until the renewable energy cooperative corporation raises all the money needed to complete a feasibility study or to undertake the project.

(7) With approval from the renewable energy cooperative corporation’s membership, use excess funds raised for one project for other renewable energy projects of the renewable energy cooperative corporation. Approval must be obtained using voting procedures specified in ORS Chapter 62 and the renewable energy cooperative corporation’s bylaws.

(8) Pursue in good faith and secure one or more executed interconnection agreements for the production and transmission of electricity.

(9) Pay its officers, directors, employees or third parties reasonable salaries comparable to cooperative corporations conducting similar business, but may not pay its officers, directors, employees, or any third party any commission or other remuneration directly or indirectly for the offer or sale of membership interests or capital stock in the renewable energy cooperative corporation.

(10)(a) Engage in limited advertising to prospective members in the renewable energy cooperative corporation. “Engage in limited advertising” means that the renewable energy cooperative corporation may provide general information about the cooperative including information about its purpose and general nature and about its operating history, including a brief description of current projects in operation, and proposed projects, to the public in Oregon for the limited purpose of promoting the cooperative and soliciting membership in the cooperative. Information about proposed projects is limited to identification of the project’s proposed location, type of renewable technology, generation capacity, estimated timeline, and estimate of project cost.

(b) Limited advertising must contain information on how to receive the disclosures required in OAR 441-025-0123 and 441-025-0124. Limited advertising must also state that the disclosure materials must be received, reviewed and acknowledged by the potential investor before a securities sale may occur. “Engage in limited advertising” does not include general solicitation or offering of investments in specific projects or in the sale of capital stock to the public. “Engage in limited advertising” does not include publication of pro forma financial information, or any indication of possible returns on investment to the general public.

(c) Any materials used for the purposes of this subsection must clearly indicate that the material does not constitute an offer of a security. Materials provided under this section do not take the place of the disclosures required by OAR 441-025-0123 and 441-025-0124. Materials must include the following statement:

“THIS IS PROMOTIONAL INFORMATION ABOUT AN OPPORTUNITY TO INVEST IN OR BECOME A MEMBER IN A RENEWABLE ENERGY COOPERATIVE CORPORATION. THIS IS NOT THE OFFER OR SALE OF SECURITIES. NO MONEY OR OTHER CONSIDERATION IS BEING SOLICITED AND NONE WILL BE ACCEPTED.NO MEMBERSHIP INTERESTS, MEMBERSHIP STOCK OR CAPITAL STOCK WILL BE SOLD OR ANY COMMITMENTS TO PURCHASE ACCEPTED UNTIL DELIVERY OF DISCLOSURES ARE MADE THAT INCLUDES COMPLETE INFORMATION ABOUT THE COOPERATIVE AND PARTICULAR PROJECTS, IF APPLICABLE. AN INDICATION OF INTEREST MADE BY A PROSPECTIVE MEMBER INVOLVES NO OBLIGATION OR COMMITMENT OF ANY KIND UNTIL DISCLOSURE MATERIALS HAVE BEEN RECEIVED AND REVIEWED. THIS PROMOTIONAL INFORMATION IS BEING PRESENTED UNDER AN EXEMPTION FROM REGISTRATION UNDER THE OREGON SECURITIES LAW AND HAS NOT BEEN REVIEWED BY THE DEPARTMENT OF CONSUMER AND BUSINESS SERVICES.”

(11) Allow a membership certificate or capital stock to be returned or resold to the renewable energy cooperative corporation in exchange for a price that does not exceed the price originally paid by the purchasing individual upon termination of the individual’s membership in the renewable energy cooperative corporation.

Stat. Auth.: ORS 59.025 & 2014 OL Ch. 69 §2
Stat. Implemented: ORS 59.025 & 2014 OL Ch. 69 §1
Hist.: FCS 6-2014, f. & cert. ef. 10-6-14

441-025-0123

Disclosures Required Related to the Sale of Membership Shares in Renewable Energy Cooperative Corporations

Prior to offering a membership shares in a renewable energy cooperative corporation to prospective purchaser, the renewable energy cooperative corporation shall provide, in writing, at no cost to the prospective purchaser, material information about the purpose and governance of the renewable energy cooperative corporation. For purposes of this subsection, “writing” includes printed, electronic and internet media. Disclosures under this section shall include, but are not limited to, the following:

(1) The renewable energy cooperative corporation’s profit and loss statement or an unaudited financial statement, and estimated use of funds or financial projections of the renewable energy cooperative corporation.

(2) Information on the experience and ability of the renewable energy cooperative corporation’s directors, principal officers and key employees to manage a renewable energy cooperative corporation and develop and operate projects to generate electricity from renewable sources.

(3) Discussion of the renewable energy cooperative corporation’s experience with and ability in developing projects to generate electricity from renewable sources.

(4) Information on minimum amount to be raised to initiate a project, consistent with section (1) of this rule, and how money will be returned to members if the renewable energy cooperative corporation doe

not raise sufficient funds to complete a project or if the renewable energy cooperative corporation determines that a project is not feasible after completing a feasibility study.

(5) Information on how the renewable energy cooperative corporation will apportion returns on an investment, if any, as permitted by applicable state and federal law.

(6) Information on risks posed by legislative or regulatory changes affecting the development or operation of a facility to generate electricity from renewable sources, including but not limited to restrictions on the sale of generated electricity, requirements to register securities under applicable state or federal law, changes to tax treatment of facilities that generate electricity from renewable sources, or other regulations that place additional restrictions on a particular type of facility generating electricity from renewable sources.

(7) If applicable, disclosures of any pending or completed, material litigation against the renewable energy cooperative corporation or against the officers, directors, and key employees of the renewable energy cooperative corporation, including the legal basis for the action and, if completed, any judgments or settlements adverse to the renewable energy cooperative corporation or to its officers, directors, and key employees.

(8) Information on how members can participate in the decision-making process of the renewable energy cooperative corporation, consistent with ORS Chapter 62 and the renewable energy cooperative corporation’s articles of incorporation or its bylaws.

(9) Information on how members may inspect the renewable energy cooperative corporation’s books and records and how the renewable energy cooperative corporation will share information with members prior to shareholder meetings.

(10) A plain language explanation of the rights and responsibilities between the renewable energy cooperative corporation and its members under the cooperative contract.

Stat. Auth.: ORS 59.025 & 2014 OL Ch. 69 §2
Stat. Implemented: ORS 59.025 & 2014 OL Ch. 69 §1
Hist.: FCS 6-2014, f. & cert. ef. 10-6-14

441-025-0124

Disclosures Related to Renewable Energy Cooperative Corporation Projects

Prior to initiating a project to be funded through membership shares, capital stock, or other permissible securities, the renewable energy cooperative corporation shall disclose, in writing, to all members, prospective members, and prospective investors, all material information about the project. For purposes of this subsection, “writing” includes printed, electronic and internet media. However, all disclosures shall be made available in printed format and prospective purchasers shall be notified of the option to obtain printed disclosures at no cost. Information disclosed shall include, but are not limited to, the following:

(1) Basic terms of the project, including:

(a) The cost of the project;

(b) Projected amount of energy to be generated;

(c) Probable users or purchasers of the energy;

(d) Anticipated revenue to be generated by the project; and

(e) Anticipated returns and distribution of revenue to investors.

(2) The physical location of the electricity-generating facility and the type of facility planned to be built and operated.

(3) Property leased or acquired by the renewable energy cooperative corporation in order to construct the facility.

(4) Information on the risks that may arise based on the outcome of an engineering analysis done to assess the suitability of a location for the project.

(5) Site surveys or other evaluations of the energy yields anticipated by the construction of the facility.

(6) All zoning approvals, building permits, and other regulatory permissions the renewable energy cooperative corporation must secure in order to complete the project.

(7) Insurance coverage for the projects, and risks if insurance coverage becomes more expensive or is unattainable at commercially reasonable rates.

(8) An estimate of how much money the renewable energy cooperative corporation intends to raise for the project, how the money will be held in escrow or otherwise impounded, and how much the renewable energy cooperative corporation may need to raise to complete the project, if any.

(9) If notes are offered to the membership or investors for a particular project, the renewable energy cooperative corporation shall disclose at a minimum the interest rate, the term, the maturity of the notes, payment dates, expected source of repayment, use of the proceeds, any conditions on prepayment, and a ban on secondary trading.

(10) A calculation of estimated net proceeds or savings that may be apportioned, distributed and paid to a member for the generation of electricity, and any risks to patronage posed by increased costs or decreased revenue.

(11) All other material information related to the project.

(12) Amendments to any information described in subsections (a) through (i) to account for any material changes in the project.

Stat. Auth.: ORS 59.025 & 2014 OL Ch. 69 §2
Stat. Implemented: ORS 59.025 & 2014 OL Ch. 69 §1
Hist.: FCS 6-2014, f. & cert. ef. 10-6-14

441-025-0125

Required Filings and Records

(1) At least 14 days before engaging in any limited advertising promoting membership shares, capital stock, or other authorized securities including notes and debentures, the renewable energy cooperative corporation shall file with the director:

(a) The written disclosures required under 441-025-0123;

(b) A generic sample of the written disclosure prepared to meet 441-025-0124; and

(c) If applicable, a written request to use the “enhanced community” standard under OAR 441-025-0120(b)(i). The request shall include identification of the geographical area to be included and the reason or basis of need for the use of the enhanced community.

(2) The renewable energy cooperative corporation shall retain a copy of each investor’s signed and dated written or electronic disclosure documents developed to meet the requirements of 441-025-0123 and 441-025-0124 for no less than four years after the termination of the offering or after any notes mature.

(3) Filing with the director does not constitute approval or acceptance of the information disclosed.

Stat. Auth.: ORS 59.025 & 2014 OL Ch. 69 §2
Stat. Implemented: ORS 59.025 & 2014 OL Ch. 69 §1
Hist.: FCS 6-2014, f. & cert. ef. 10-6-14

441-025-0126

Utilization of Disclosures and Disclaimer

(1) Each investor or purchaser of a membership in a renewable energy cooperative corporation shall sign and date a copy of the disclosures required under OAR 441-025-0123 and 441-025-0124. The signed copy shall be retained by the cooperative corporation for no less than the time required by 441-025-0125.

(2) Disclosures required by OAR 441-025-0123 and 441-025-0124 shall include the following legend set out in a prominent place on the first page of the document:

"This offering is being made in reliance on an exemption to the securities registration requirements under the Oregon Securities Law. The Director of the Department of Consumer and Business Services of the State of Oregon has not made any finding that the statements made in this document are true, complete or not misleading. The fact that an exemption is available for a security or a transaction does not mean that the director has passed in any way upon the merits or qualifications of, or recommended or given approval to, any person, security or transaction. In deciding whether or not to invest in the securities offered, you should rely on your own examination of the cooperative issuing the securities and the terms of the offering including the merits and risks.”

Stat. Auth.: ORS 59.025 & 2014 OL Ch. 69 §2
Stat. Implemented: ORS 59.025 & 2014 OL Ch. 69 §1
Hist.: FCS 6-2014, f. & cert. ef. 10-6-14

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