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Exempt Private Placements

 

When a private offering is being conducted in Colorado, there can be no general advertising or public solicitation of any kind. In most cases, the issuer will have an exemption from registration with the Securities and Exchange Commission (usually a Regulation-D exemption).

The Colorado Securities Act contains three registration exemptions that are often used with private offerings:

Section 11-51-308(1)(i), Section 11-51-308(1)(j) and Section 11-51-308(1)(p).

 

Section 11-51-308( 1 )( i ) has no Colorado filing requirement and may be used by issuers who are relying on section 4(2) under the Federal 1933 Act, but usually not Regulation D. Commissions may not be paid to anyone other than a licensed broker-dealer.

 

Section 11-51-308( 1 )( j ) has no Colorado filing requirement and may be used by issuers who are making offers to no more than 20 persons in Colorado and selling to no more than 10 purchasers in this state. Commissions may not be paid to anyone other than a licensed broker-dealer and the issuer must reasonably believe that the investors are purchasing for investment only. Typically, this exemption would be used for any of the privately offered Reg-D's that meet these requirements.

 

Section 11-51-308( 1 )( p ) is a safe-harbor type of exemption and does not have the offeree/investor numbers limitations other than Federal limitations. Regulation-A offerings can be offered publicly and are not restricted from resale while private exemption securities are restricted from re-sale by federal law and are purchased for investment purposes only. Commissions may not be paid to anyone other than a licensed broker-dealer. This section 11-51-308(1)(p) requires the issuer to submit a fee of $75 made out to the Colorado State Treasurer and one copy of whatever documents are submitted to the SEC (usually the Form-D). A Consent to Service of Process is not required if you are filing a copy of the Federal Form D (as it is included in that Form). Include a cover letter with a brief description of the applicable State and Federal citations and a contact person for the filing. The filing should be submitted concurrently with the time of the Federal filing. In the case of a Reg-D filing, the filing should be submitted no later than 15 days after the first Colorado sale.  For information regarding the filing of the Form D, CLICK HERE. Form D Filing Information pdf file

 

Submit this filing to:
 

Colorado Division of Securities
1560 Broadway, Suite 900

Denver, CO 80202.

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NOTE: Both Sections 308 (1)( j ) and 308(1)( p ) may be used for most Regulation-D "Private Offerings"

NOTE: Section 11-51-308 (1)( p ) may also be used with some "Limited Public Offerings" under the following circumstances:

Pursuant to Rule 51-3.19, offers may be made to "Accredited Investors Only", using limited "public" solicitation and/or advertising and relying on Rule 504 at the federal level. Securities offered and sold under this Rule are for investment purposes only and not for re-sale. The issuer must file a fee of $75 made out to the Colorado State Treasurer, a copy of the Federal Form-D, a MAIE Form and a Cover Letter, no later than 15 days after the first Colorado sale. (see the Rule Re: pre-sale notices) A copy of the Model Accredited Investor Exemption (MAIE) form may be found at FORMS/UNIFORM FORMS. Please contact the Colorado Division of Securities for more information regarding this type of filing.

 

 

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1560 Broadway, Suite 900, Denver, CO 80202 Email
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