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

 

DIVISION 35

SECURITIES TRANSACTIONS EXEMPT

FROM REGISTRATION

441-035-0005

Self-Executing Transaction Exemptions

(1) Except for ORS 59.035(11) and OAR 441-035-0045, exemptions available pursuant to ORS 59.035 are self-executing. No filing or fee is required to utilize any exemption in 59.035, except for 59.035(11) and OAR 441-035-0045.

(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 59.035, ORS 59.195 & ORS 59.275
Hist.: FCS 7-2000, f. & cert.ef. 6-2-00

441-035-0010

Accredited Investor

For purposes of ORS 59.035(5) accredited investor includes:

(1) Any bank as defined in Section 3(a)(2) of the Securities Act of 1933 (the "Act"), or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; any insurance company as defined in Section 2(13) of the Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of the Investment Company Act of 1940; any small business investment company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of Title 1 of the Employee Retirement Income Security Act of 1974 ("ERISA"), if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors.

(2) Any private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940.

(3) Any organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000.

(4) Any director, executive officer, or general partner of the issuer of the securities being offered or sold or any director, executive officer, or general partner of a general partner of that issuer.

(5) Any natural person whose individual net worth, or joint net worth with that person's spouse, at the time of the purchase exceeds $1,000,000, excluding the value of the natural investor’s primary residence.

(6) Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.

(7) Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in 17 CFR 230.506(b)(2)(ii).

(8) Any entity in which all of the equity owners are accredited investors.

Stat. Auth.: ORS 59.285
Stats. Implemented: ORS 59.035(5)
Hist.: CC 12-1985(Temp), f. & ef. 11-25-85; CC 1-1987, f. & ef. 2-4-87; FCS 8-1988(Temp), f. & cert. ef. 4-11-88; Renumbered from 815-030-0042; FCS 14-1988, f. & ef. 10-10-88; FCS 5-1990, f. & cert. ef. 8-21-90; FCS 9-2010(Temp), f. 8-2-10, cert. ef. 8-3-10 thru
1-30-11; FCS 2-2011, f. & cert. ef. 2-15-11

441-035-0020

Transactions Ineligible Under ORS 59.035(7) Exemption

The exemption under ORS 59.035(7) is not available if the transaction includes an investment contract. An investment contract may be found in:

(1) The sale of fractional interests or pooled interests in real paper. Under ORS 59.350(2), a transaction with an entity formed substantially for the purpose of acquiring the real estate paper will be treated as the sale of a fractional interest or pooled investment.

(2) Any of the following activities by the seller or its affiliates:

(a) Selection of the security;

(b) Collection of payments due under the securities;

(c) Advancement of delinquent payments;

(d) Decisions regarding default and foreclosure;

(e) Any other activity by the seller whereby management and control is exercised over the investment for the purchaser; or

(f) The mortgage broker, broker-dealer, or person described in ORS 59.015(1)(b) guarantees the real estate paper or agrees to buy back or otherwise replace the real estate paper in the event of default.

Stat. Auth.: ORS 59.045(1) & ORS 59.285
Stats. Implemented: ORS 59.035(7) & ORS 59.045(1)
Hist.: FCS 4-1987(Temp), f. 9-24-87, ef. 9-28-87; Renumbered from 815-030-0042.1; FCS 7-1988, f. 3-22-88, cert. ef. 3-25-88; FCS 16-1988(Temp), f. & ef. 11-21-88; Renumbered from 815-037-0039; FCS 4-1990, f. & cert. ef. 8-21-90; FCS 1-1992, f. 1-31-92, cert. ef. 2-1-92

441-035-0021

Disclosure Requirements for Real Estate Paper Transactions Exempt Under ORS 59.035(7)

(1) All transactions exempt under ORS 59.035(7), involving a mortgage banker or mortgage broker must comply with the provisions of OAR 441-870-0050.

(2) All transactions exempt under ORS 59.035(7), involving a broker-dealer or person described in 59.015(1)(b) must comply with the provisions of this rule. Compliance does not relieve any person of any other duties and liabilities under the Oregon Securities Law, Oregon Administrative Rules, or any other provision of law.

(3) For transactions to be exempt under ORS 59.035(7), a broker-dealer or person described in 59.015(1)(b) must provide to the purchaser, prior to the time of sale, a written disclosure document containing the following information:

(a) The legal description of the real property underlying the real estate paper being sold;

(b) The priority of the lien created by the real estate paper and the total face amount of any senior liens including outstanding taxes; or a current title report on the real property prepared by a title insurance company;

(c) The terms of any senior lien and of any assignments thereof, or a copy of the instrument creating the senior lien and any assignments thereof;

(d) A statement whether any future advances may have a priority senior to that of the lien created by the real estate paper being sold;

(e) In the case of a sale of junior real estate paper, a statement of the risk of loss on foreclosure of a senior lien;

(f) A prominent statement of any balloon payments, including the dates payable and the amounts due;

(g) A statement of the balance of all taxes owing on the real property underlying the real estate paper, as provided by the county assessor directly or indirectly through a title insurance company;

(h) A statement of the value of the real property underlying the real estate paper, based upon the tax assessed value of the property underlying the real estate paper, as provided by the county assessor directly or indirectly through a title insurance company, and:

(A) If available, a statement of value based upon an appraisal or an opinion of value prepared by an independent licensed appraiser may also be provided; however

(B) Under no circumstances may the statement of value be based upon any source other than the county assessor or an independent licensed appraiser.

(i) If the transaction involves existing real estate paper:

(A) The debtor's payment record for the lesser of two years immediately preceding the sale or for the period of existence of the real estate paper, covering the existing real estate paper being sold; and

(B) If the payment record is less than two years, or the real estate paper being sold is a junior lien, a credit report on the debtor prepared by a credit reporting agency and current within 90 days of the transaction.

(j) If the transaction involves real estate paper to be created:

(A) The debtor's payment record, if any, for the lesser of two years immediately preceding the sale or for the period of existence of the real estate paper, covering:

(i) Any lien senior to the real estate paper being created; and

(ii) Any lien being retired with the proceeds from the subject sale.

(B) A credit report on the debtor prepared by a credit reporting agency and current within 90 days of the transaction; and

(C) A financial statement of the debtor current within 90 days of the transaction.

(k) If the seller of the real estate paper, the seller's agent, or any affiliate is the debtor, a statement disclosing that fact and the amount of cash paid to the debtor in consideration for the issuance of the real estate paper;

(l) A statement of any commissions, collection fees, and other costs chargeable to the purchaser of the real estate paper; and

(m) A statement of whether the purchaser of the real estate paper will be insured against casualty loss.

(4) The information contained in the written disclosure document described in section (3) of this rule may be provided in summary form except that copies of the tax statement and the appraisal, where applicable, must be true and complete copies of the originals.

(5) Although not a condition of the availability of the exemption granted pursuant to ORS 59.035(7), all broker-dealers relying on the exemption and this rule shall, pursuant to ORS 59.195, maintain and make available to the Director, or any purchaser involved in the subject transaction, a separate file for each transaction. Each file shall be retained for a period of six years following the date of the transaction, and shall include:

(a) A copy of the disclosure document described in section (3) of this rule;

(b) A written statement, signed and dated by the purchaser, acknowledging receipt of the written disclosure document and an opportunity to review the supporting documentation;

(c) The supporting documentation evidencing the summarized information contained in the disclosure document; and

(d) Copies of the documents described in section (6) of this rule.

(6) The broker-dealer or person described in ORS 59.015(1)(b) must:

(a) Deliver to the purchaser or licensed escrow agent or title company the written evidence of the obligation properly endorsed, together with the instrument creating the purchaser's lien or assessment of the lien;

(b) Record, or cause to have recorded, the instrument creating the purchaser's lien or assignment of the lien in a timely manner in the county or counties where the property is located and retain a copy of the recorded instrument in the purchaser's transaction file; and

(c) If a title report prepared by a title insurance company is relied upon for the disclosure required under subsection (3)(b) of this rule, deliver to the purchaser a fully paid title insurance policy running to the benefit of the purchaser.

(7) If a security transaction is exempt under ORS 59.035(7), the following are also exempt:

(a) Guarantees or surety agreements created as an integral part of the real estate paper and sold with the real estate paper if the guarantor or surety is not a mortgage banker, mortgage broker, broker-dealer, or person described in ORS 59.015(1)(b); and

(b) "With-recourse" agreements or guarantees created by a seller and sold with the real estate paper, if the seller is not a mortgage banker, mortgage broker, broker-dealer, or person described in ORS 59.015(1)(b).

Stat. Auth.: ORS 59.035(7), 59.045(1), 59.045(2) & 59.350(2)
Stats. Implemented: ORS 59.035(7), 59.045 & 59.350(2)
Hist.: FCS 7-1988, f. 3-22-88, cert. ef. 3-25-88; Renumbered from 815-037-0037; FCS 5-1989, f. & cert. ef. 5-17-89; Renumbered from 441-205-0160; FCS 4-1990, f. & cert. ef. 8-21-90; FCS 1-1992, f. 1-31-92, cert. ef. 2-1-92; FCS 2-1994, f. & cert. ef. 1-7-94; FCS 4-2007, f. 10-11-07, cert. ef. 1-1-08

441-035-0030

Manual Exemption

Pursuant to ORS 59.035(10)(c), the Mergent, Standard and Poor's, and Fitch Investors Service securities manuals are approved for purposes of the exemption granted under subsection (10) of 59.035.

Stat. Auth.: ORS 59.285
Stats. Implemented: ORS 59.035(10)
Hist.: CC 13, f. 9-19-73, ef. 10-1-73; CC 22, f. & ef. 11-25-75; Renumbered from 815-030-0035.90; Renumbered from 815-030-0045; FCS 5-1990, f. & cert. ef. 8-21-90; FCS 7-2000; f. & cert. ef. 6-2-00; FCS 9-2001, f. & cert. ef. 9-28-01

441-035-0040

NASDAQ Exemption

Pursuant to subsection (10)(d) of ORS 59.035, the National Association of Securities Dealers Automated Quotations, NASDAQ, is approved for purposes of the exemption granted under section (10) of 59.035, except for securities quoted on the OTC Bulletin Board.

Stat. Auth.: ORS 59.285
Stats. Implemented: ORS 59.035(10)
Hist.: CC 13, f. 9-19-73, ef. 10-1-73; Renumbered from 815-030-0035.91; Renumbered from 815-030-0050; FCS 5-1990, f. & cert. ef. 8-21-90; FCS 7-2000; f. & cert. ef. 6-2-00

441-035-0045

Solicitation of Interest for Offering of Securities Pursuant to SEC Regulation A or OAR 441-065-0225

(1) An offer, but not a sale, of a security made by or on behalf of an issuer for the sole purpose of soliciting an indication of interest in receiving a prospectus (or its equivalent) for such security is exempt from ORS 59.055 if all of the following conditions are satisfied:

(a) The issuer is or will be a business entity organized under the laws of one of the states or possessions of the United States or one of the provinces or territories of Canada, is engaged in or proposes to engage in a business other than petroleum exploration or production or mining or other extractive industries and is not a "blank check company," as such term is defined in OAR 441-045-0010(2);

(b) The offerer intends to register the security in this state and conduct its offering pursuant to either Regulation A, as promulgated by the Securities and Exchange Commission, or OAR 441-065-0225;

(c) At least 10 business days prior to the initial solicitation of interest under this rule, the offerer files with the Director:

(A) A completed solicitation of interest application on a form prescribed by the Director along with any other materials to be used to conduct solicitations of interest, including, but not limited to, the script of any broadcast to be made and a copy of any notice to be published;

(B) The minimum registration fee as set in OAR 441-065-0001;

(C) A completed Form U-4 (salesperson application available from the Securities Section) for at least one, but no more than five, issuer salespersons (each such salesperson must be a bona fide officer, director or employee of the issuer); and

(D) A salesperson licensing fee as set in OAR 441-175-0002 for each salesperson.

(d) At least five business days prior to usage, the offerer files with the Director any amendments to the foregoing materials or additional materials to be used to conduct solicitations of interest, except for materials provided to a particular offeree pursuant to a request by that offeree;

(e) No Solicitation of Interest Form, script, advertisement or other material which the offerer has been notified by the Director not to distribute is used to solicit indications of interest;

(f) Except for scripted broadcasts and published notices, the offerer does not communicate with any offeree about the contemplated offering unless the offeree is provided with the most current Solicitation of Interest Form at or before the time of the communication or within five days from the communication;

(g) During the solicitation of interest period, the offerer does not solicit or accept money or a commitment to purchase securities;

(h) No sale is made until at least seven days after delivery to the purchaser of a final prospectus, or in those instances in which delivery of a preliminary prospectus is allowed hereunder, a preliminary prospectus;

(i) The offerer does not know, and in the exercise of reasonable care, could not know that the issuer or any of the issuer's officers, directors, ten percent shareholders or promoters:

(A) Has filed a registration statement which is the subject of a currently effective registration stop order entered pursuant to any federal or state securities law within five years prior to the filing of the Solicitation of Interest Form.

(B) Has been convicted within five years prior to the filing of the Solicitation of Interest Form of any felony or misdemeanor in connection with the offer, purchase or sale of any security or any felony involving fraud or deceit, including, but not limited to, forgery, embezzlement, obtaining money under false pretenses, larceny, or conspiracy to defraud.

(C) Is currently subject to any federal or state administrative enforcement order or judgment entered by any state securities administrator or the Securities and Exchange Commission within five years prior to the filing of the Solicitation of Interest Form or is subject to any federal or state administrative enforcement order or judgment entered within five years prior to the filing of the Solicitation of Interest Form in which fraud or deceit, including, but not limited to, making untrue statements of material facts and omitting to state material facts, was found.

(D) Is subject to any federal or state administrative enforcement order or judgment which prohibits, denies, or revokes the use of any exemption from registration in connection with the offer, purchase or sale of securities.

(E) Is currently subject to any order, judgment, or decree of any court of competent jurisdiction temporarily or preliminarily restraining or enjoining, or is subject to any order, judgment or decree of any court of competent jurisdiction permanently restraining or enjoining, such party from engaging in or continuing any conduct or practice in connection with the purchase or sale of any security or involving the making of any false filing with the state entered within five years prior to the filing of the Solicitation of Interest Form.

(F) The prohibitions listed in paragraphs (A) through (E) of this subsection shall not apply if the person subject to the disqualification is duly licensed or registered to conduct securities related business in the state in which the administrative order or judgment was entered against such person or if the broker-dealer employing such party is licensed in this state and the Form B-D filed with this state discloses the order, conviction, judgment or decree relating to such person. No person disqualified under this subsection may act in a capacity other than that for which the person is licensed. Any disqualification caused by this action is automatically waived if the agency which created the basis for disqualification determines upon a showing of good cause that it is not necessary under the circumstances that the exemption be denied.

(2) A failure to comply with any condition of section (1) of this rule will not result in the loss of the exemption from the requirements of ORS 59.055 for any offer to a particular individual or entity if the offerer shows:

(a) The failure to comply did not pertain to a condition directly intended to protect that particular individual or entity;

(b) The failure to comply was insignificant with respect to the offering as a whole; and

(c) A good faith and reasonable attempt was made to comply with all applicable conditions of section (1). Where an exemption is established only through reliance upon this section (2), the failure to comply shall nonetheless be actionable as a violation of the Act by the Director under ORS 59.245 and 59.255 and constitute grounds for denying, withdrawing or conditioning the exemption pursuant to 59.045 as to a specific security or transaction.

(3) The offerer shall comply with the requirements set forth below. Failure to comply will not result in the loss of the exemption from the requirements of ORS 59.055, but shall be a violation of the Oregon Securities Law, be actionable by the Director under 59.245 and 59.255, and constitute grounds for denying, withdrawing or conditioning the exemption pursuant to 59.045 as to a specific security or transaction:

(a) Any published notice or script for broadcast must contain at least the identity of the chief executive officer of the issuer, a brief and general description of its business and products, and the following legends:

(A) THIS IS A SOLICITATION OF INTEREST ONLY. NO MONEY OR OTHER CONSIDERATION IS BEING SOLICITED AND NONE WILL BE ACCEPTED;

(B) NO SALES OF THE SECURITIES WILL BE MADE OR COMMITMENT TO PURCHASE ACCEPTED UNTIL DELIVERY OF AN OFFERING CIRCULAR THAT INCLUDES COMPLETE INFORMATION ABOUT THE ISSUER AND THE OFFERING;

(C) AN INDICATION OF INTEREST MADE BY A PROSPECTIVE INVESTOR INVOLVES NO OBLIGATION OR COMMITMENT OF ANY KIND; and

(D) THIS OFFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE FEDERAL AND STATE SECURITIES LAWS. NO SALE MAY BE MADE UNTIL THE OFFERING STATEMENT IS QUALIFIED BY THE SEC, IF APPLICABLE, AND IS REGISTERED IN THIS STATE.

(b) All communications with prospective investors made in reliance on this rule must cease after a registration statement is filed in this state, and no sale may be made until at least 20 calendar days after the last communication made in reliance on this rule.

(4) The Director may waive any condition of this exemption in writing, upon application by the offerer and cause having been shown. Neither compliance nor attempted compliance with this rule, nor the absence of any objection or order by the Director with respect to any offer of securities undertaken pursuant to this rule, shall be deemed to be a waiver of any condition of the rule or deemed to be a confirmation by the Director of the availability of this rule.

(5) Offers made in reliance on this rule will not result in a violation of ORS 59.055 by virtue of being integrated with subsequent offers or sales of securities unless such subsequent offers and sales would be integrated under federal securities laws.

(6) Issuers on whose behalf indications of interest are solicited under this rule may not make offers or sales in reliance on ORS 59.025(7), 59.035(5), 59.035(12) or OAR 441-035-0050 until six months after the last communication with a prospective investor made pursuant to this rule.

Stat. Auth.: ORS 59.025(4) & 59.035(11)
Stats. Implemented: ORS 59.025(4), 59.035(11), 59.035(15) & 59.285
Hist.: FCS 10-1994, f. & cert. ef. 10-3-94; FCS 2-2003(Temp), f. & cert. ef. 11-26-03 thru 5-21-04; FCS 1-2004, f. & cert. ef. 5-19-04

441-035-0050

Isolated Issuer Transaction

(1) An exemption is granted pursuant to ORS 59.035(15) for any isolated issuer transaction not involving a public offering.

(2) For purposes of this rule, an "isolated issuer transaction" shall include sales by or on behalf of an issuer to three or fewer persons during any 24-month period.

Stat. Auth.: ORS 59.035(15)
Stats. Implemented: ORS 59.035(15)
Hist.: FCS 2-1993, f. 4-13-93, cert. ef. 4-15-93

441-035-0060

Offers of Securities on the Internet

(1) Scope of Rule. This rule applies to any offer for sale of securities placed on the Internet, except for those offers for sale from Oregon. As used in this section, the term "Internet" is to be construed liberally to include all proprietary or common carrier electronic systems or similar media.

(2) Pursuant to ORS 59.035(15), an offer for sale of securities placed on the Internet by, or on behalf of, an issuer, involving securities that will not be sold in Oregon, shall be exempt from the notice filing requirements of 59.049(1) and (2), and the registration requirements of 59.055, if the following conditions are observed:

(a) The Internet offer for sale prominently and conspicuously indicates, on a page that must be viewed by readers before reading any portion of the offering document or the subscription agreement, either that the securities are not being offered to persons in Oregon, or in which specific states, other than Oregon, the securities are being offered;

(b) The offer for sale is not otherwise specifically directed to any person in Oregon by, or on behalf of, the issuer; and

(c) No sales of the issuer's securities are made in Oregon as a direct or indirect result of the Internet offer for sale.

(3) Any issuer who places an offer for sale of securities on the Internet in accordance with this section may subsequently sell the securities to persons in Oregon:

(a) Through filing a notice of the offering under ORS 59.049(1) or (2), or registration of the offering under 59.065 and the delivery of a final prospectus to the Oregon investor prior to sale;

(b) Pursuant to a transaction exemption which permits general solicitation; or

(c) Pursuant to ORS 59.035(5), 59.035(12), or OAR 441-035-0050 provided that the sale transaction is executed no earlier than six months after the final contact between the issuer and the prospective Oregon investor.

Stat. Auth.: ORS 59.285; 59.035(15)
Stats. Implemented: ORS 59.035
Hist.: FCS 7-2000, f. & cert.ef. 6-2-00

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