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Full Text of HB3791  100th General Assembly

HB3791ham001 100TH GENERAL ASSEMBLY

Rep. Carol Sente

Filed: 3/24/2017

 

 


 

 


 
10000HB3791ham001LRB100 07306 JLS 24077 a

1
AMENDMENT TO HOUSE BILL 3791

2    AMENDMENT NO. ______. Amend House Bill 3791 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Illinois Securities Law of 1953 is amended
5by changing Sections 2.35, 4, and 8d as follows:
 
6    (815 ILCS 5/2.35)
7    Sec. 2.35. Qualified escrowee. "Qualified escrowee" means
8a person, firm, partnership, association, corporation, or
9other legal entity who: (a) falls under the definition of
10"title insurance company" under, and pursuant to the terms and
11requirements of, the Title Insurance Act, or is otherwise an
12agent or affiliate of such title insurance company, and which
13maintains at least one physical business location within the
14State; (b) is certified as an independent escrowee under, and
15pursuant to the terms and requirements of, the Title Insurance
16Act; or (c) is a bank, regulated trust company, savings bank,

 

 

10000HB3791ham001- 2 -LRB100 07306 JLS 24077 a

1savings and loan association, or credit union, registered
2broker-dealer, or law firm which is authorized to do business
3in the State and which maintains at least one physical business
4location within the State.
5(Source: P.A. 99-182, eff. 1-1-16.)
 
6    (815 ILCS 5/4)  (from Ch. 121 1/2, par. 137.4)
7    Sec. 4. Exempt transactions. The provisions of Sections 2a,
85, 6 and 7 of this Act shall not apply to any of the following
9transactions, except where otherwise specified in this Section
104:
11        A. Any offer or sale, whether through a dealer or
12    otherwise, of securities by a person who is not an issuer,
13    underwriter, dealer or controlling person in respect of
14    such securities, and who, being the bona fide owner of such
15    securities, disposes thereof for his or her own account;
16    provided, that such offer or sale is not made directly or
17    indirectly for the benefit of the issuer or of an
18    underwriter or controlling person.
19        B. Any offer, sale, issuance or exchange of securities
20    of the issuer to or with security holders of the issuer
21    except to or with persons who are security holders solely
22    by reason of holding transferable warrants, transferable
23    options, or similar transferable rights of the issuer, if
24    no commission or other remuneration is paid or given
25    directly or indirectly for or on account of the procuring

 

 

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1    or soliciting of such sale or exchange (other than a fee
2    paid to underwriters based on their undertaking to purchase
3    any securities not purchased by security holders in
4    connection with such sale or exchange).
5        C. Any offer, sale or issuance of securities to any
6    corporation, bank, savings bank, savings institution,
7    savings and loan association, trust company, insurance
8    company, building and loan association, or dealer; to a
9    pension fund, pension trust, or employees' profit sharing
10    trust, other financial institution or institutional
11    investor, any government or political subdivision or
12    instrumentality thereof, whether the purchaser is acting
13    for itself or in some fiduciary capacity; to any
14    partnership or other association engaged as a substantial
15    part of its business or operations in purchasing or holding
16    securities; to any trust in respect of which a bank or
17    trust company is trustee or co-trustee; to any entity in
18    which at least 90% of the equity is owned by persons
19    described under subsection C, H, or S of this Section 4; to
20    any employee benefit plan within the meaning of Title I of
21    the Federal ERISA Act if (i) the investment decision is
22    made by a plan fiduciary as defined in Section 3(21) of the
23    Federal ERISA Act and such plan fiduciary is either a bank,
24    savings and loan association, insurance company,
25    registered investment adviser or an investment adviser
26    registered under the Federal 1940 Investment Advisers Act,

 

 

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1    or (ii) the plan has total assets in excess of $5,000,000,
2    or (iii) in the case of a self-directed plan, investment
3    decisions are made solely by persons that are described
4    under subsection C, D, H or S of this Section 4; to any
5    plan established and maintained by, and for the benefit of
6    the employees of, any state or political subdivision or
7    agency or instrumentality thereof if such plan has total
8    assets in excess of $5,000,000; or to any organization
9    described in Section 501(c)(3) of the Internal Revenue Code
10    of 1986, any Massachusetts or similar business trust, or
11    any partnership, if such organization, trust, or
12    partnership has total assets in excess of $5,000,000.
13        D. The Secretary of State is granted authority to
14    create by rule or regulation a limited offering
15    transactional exemption that furthers the objectives of
16    compatibility with federal exemptions and uniformity among
17    the states. The Secretary of State shall prescribe by rule
18    or regulation the amount of the fee for filing any report
19    required under this subsection, but the fee shall not be
20    less than the minimum amount nor more than the maximum
21    amount established under Section 11a of this Act and shall
22    not be returnable in any event.
23        E. Any offer or sale of securities by an executor,
24    administrator, guardian, receiver or trustee in insolvency
25    or bankruptcy, or at any judicial sale, or at a public sale
26    by auction held at an advertised time and place, or the

 

 

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1    offer or sale of securities in good faith and not for the
2    purpose of avoiding the provisions of this Act by a pledgee
3    of securities pledged for a bona fide debt.
4        F. Any offer or sale by a registered dealer, either as
5    principal or agent, of any securities (except face amount
6    certificate contracts and investment fund shares) at a
7    price reasonably related to the current market price of
8    such securities, provided:
9        (1) (a) the securities are issued and outstanding;
10            (b) the issuer is required to file reports pursuant
11        to Section 13 or Section 15(d) of the Federal 1934 Act
12        and has been subject to such requirements during the 90
13        day period immediately preceding the date of the offer
14        or sale, or is an issuer of a security covered by
15        Section 12(g)(2)(B) or (G) of the Federal 1934 Act;
16            (c) the dealer has a reasonable basis for believing
17        that the issuer is current in filing the reports
18        required to be filed at regular intervals pursuant to
19        the provisions of Section 13 or Section 15(d), as the
20        case may be, of the Federal 1934 Act, or in the case of
21        insurance companies exempted from Section 12(g) of the
22        Federal 1934 Act by subparagraph 12(g)(2)(G) thereof,
23        the annual statement referred to in Section
24        12(g)(2)(G)(i) of the Federal 1934 Act; and
25            (d) the dealer has in its records, and makes
26        reasonably available upon request to any person

 

 

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1        expressing an interest in a proposed transaction in the
2        securities, the issuer's most recent annual report
3        filed pursuant to Section 13 or 15(d), as the case may
4        be, of the Federal 1934 Act or the annual statement in
5        the case of an insurance company exempted from Section
6        12(g) of the Federal 1934 Act by subparagraph
7        12(g)(2)(G) thereof, together with any other reports
8        required to be filed at regular intervals under the
9        Federal 1934 Act by the issuer after such annual report
10        or annual statement; provided that the making
11        available of such reports pursuant to this
12        subparagraph, unless otherwise represented, shall not
13        constitute a representation by the dealer that the
14        information is true and correct, but shall constitute a
15        representation by the dealer that the information is
16        reasonably current; or
17        (2) (a) prior to any offer or sale, an application for
18        the authorization thereof and a report as set forth
19        under sub-paragraph (d) of this paragraph (2) has been
20        filed by any registered dealer with and approved by the
21        Secretary of State pursuant to such rules and
22        regulations as the Secretary of State may prescribe;
23            (b) the Secretary of State shall have the power by
24        order to refuse to approve any application or report
25        filed pursuant to this paragraph (2) if
26                (i) the application or report does not comply

 

 

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1            with the provisions of this paragraph (2), or
2                (ii) the offer or sale of such securities would
3            work or tend to work a fraud or deceit, or
4                (iii) the issuer or the applicant has violated
5            any of the provisions of this Act;
6            (c) each application and report filed pursuant to
7        this paragraph (2) shall be accompanied by a filing fee
8        and an examination fee in the amount established
9        pursuant to Section 11a of this Act, which shall not be
10        returnable in any event;
11            (d) there shall be submitted to the Secretary of
12        State no later than 120 days following the end of the
13        issuer's fiscal year, each year during the period of
14        the authorization, one copy of a report which shall
15        contain a balance sheet and income statement prepared
16        as of the issuer's most recent fiscal year end
17        certified by an independent certified public
18        accountant, together with such current information
19        concerning the securities and the issuer thereof as the
20        Secretary of State may prescribe by rule or regulation
21        or order;
22            (e) prior to any offer or sale of securities under
23        the provisions of this paragraph (2), each registered
24        dealer participating in the offer or sale of such
25        securities shall provide upon request of prospective
26        purchasers of such securities a copy of the most recent

 

 

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1        report required under the provisions of sub-paragraph
2        (d) of this paragraph (2);
3            (f) approval of an application filed pursuant to
4        this paragraph (2) of subsection F shall expire 5 years
5        after the date of the granting of the approval, unless
6        said approval is sooner terminated by (1) suspension or
7        revocation by the Secretary of State in the same manner
8        as is provided for in subsections E, F and G of Section
9        11 of this Act, or (2) the applicant filing with the
10        Secretary of State an affidavit to the effect that (i)
11        the subject securities have become exempt under
12        Section 3 of this Act or (ii) the applicant no longer
13        is capable of acting as the applicant and stating the
14        reasons therefor or (iii) the applicant no longer
15        desires to act as the applicant. In the event of the
16        filing of an affidavit under either preceding
17        sub-division (ii) or (iii) the Secretary of State may
18        authorize a substitution of applicant upon the new
19        applicant executing the application as originally
20        filed. However, the aforementioned substituted
21        execution shall have no effect upon the previously
22        determined date of expiration of approval of the
23        application. Notwithstanding the provisions of this
24        subparagraph (f), approvals granted under this
25        paragraph (2) of subsection F prior to the effective
26        date of this Act shall be governed by the provisions of

 

 

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1        this Act in effect on such date of approval; and
2            (g) no person shall be considered to have violated
3        Section 5 of this Act by reason of any offer or sale
4        effected in reliance upon an approval granted under
5        this paragraph (2) after a termination thereof under
6        the foregoing subparagraph (f) if official notice of
7        such termination has not been circulated generally to
8        dealers by the Secretary of State and if such person
9        sustains the burden of proof that he or she did not
10        know, and in the exercise of reasonable care, could not
11        have known, of the termination; or
12        (3) the securities, or securities of the same class,
13    are the subject of an existing registration under Section 5
14    of this Act.
15    The exemption provided in this subsection F shall apply
16only if the offer or sale is made in good faith and not for the
17purpose of avoiding any of the provisions of this Act, and only
18if the offer or sale is not made for the direct or indirect
19benefit of the issuer of the securities, or the controlling
20person in respect of such issuer.
21    G. (1) Any offer, sale or issuance of a security, whether
22    to residents or to non-residents of this State, where:
23            (a) all sales of such security to residents of this
24        State (including the most recent such sale) within the
25        immediately preceding 12-month period have been made
26        to not more than 35 persons or have involved an

 

 

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1        aggregate sales price of not more than $1,000,000;
2            (b) such security is not offered or sold by means
3        of any general advertising or general solicitation in
4        this State; and
5            (c) no commission, discount, or other remuneration
6        exceeding 20% of the sale price of such security, if
7        sold to a resident of this State, is paid or given
8        directly or indirectly for or on account of such sales.
9        (2) In computing the number of resident purchasers or
10    the aggregate sales price under paragraph (1) (a) above,
11    there shall be excluded any purchaser or dollar amount of
12    sales price, as the case may be, with respect to any
13    security which at the time of its sale was exempt under
14    Section 3 or was registered under Section 5, 6 or 7 or was
15    sold in a transaction exempt under other subsections of
16    this Section 4.
17        (3) A prospectus or preliminary prospectus with
18    respect to a security for which a registration statement is
19    pending or effective under the Federal 1933 Act shall not
20    be deemed to constitute general advertising or general
21    solicitation in this State as such terms are used in
22    paragraph (1) (b) above, provided that such prospectus or
23    preliminary prospectus has not been sent or otherwise
24    delivered to more than 150 residents of this State.
25        (4) The Secretary of State shall by rule or regulation
26    require the filing of a report or reports of sales made in

 

 

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1    reliance upon the exemption provided by this subsection G
2    and prescribe the form of such report and the time within
3    which such report shall be filed. Such report shall set
4    forth the name and address of the issuer and of the
5    controlling person, if the sale was for the direct or
6    indirect benefit of such person, and any other information
7    deemed necessary by the Secretary of State to enforce
8    compliance with this subsection G. The Secretary of State
9    shall prescribe by rule or regulation the amount of the fee
10    for filing any such report, established pursuant to Section
11    11a of this Act, which shall not be returnable in any
12    event. The Secretary of State may impose, in such cases as
13    he or she may deem appropriate, a penalty for failure to
14    file any such report in a timely manner, but no such
15    penalty shall exceed an amount equal to five times the
16    filing fee. The contents of any such report or portion
17    thereof may be deemed confidential by the Secretary of
18    State by rule or order and if so deemed shall not be
19    disclosed to the public except by order of court or in
20    court proceedings. The failure to file any such report
21    shall not affect the availability of such exemption, but
22    such failure to file any such report shall constitute a
23    violation of subsection D of Section 12 of this Act,
24    subject to the penalties enumerated in Section 14 of this
25    Act. The civil remedies provided for in subsection A of
26    Section 13 of this Act and the civil remedies of rescission

 

 

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1    and appointment of a receiver, conservator, ancillary
2    receiver or ancillary conservator provided for in
3    subsection F of Section 13 of this Act shall not be
4    available against any person by reason of the failure to
5    file any such report or on account of the contents of any
6    such report.
7        H. Any offer, sale or issuance of a security to an
8    accredited investor provided that such security is not
9    offered or sold by means of any general advertising or
10    general solicitation, except as otherwise permitted in
11    this Act.
12        I. Any offer, sale or issuance of securities to or for
13    the benefit of security holders of any person incident to a
14    vote by such security holders pursuant to such person's
15    organizational document or any applicable statute of the
16    jurisdiction of such person's organization, on a merger,
17    consolidation, reclassification of securities, or sale or
18    transfer of assets in consideration of or exchange for
19    securities of the same or another person.
20        J. Any offer, sale or issuance of securities in
21    exchange for one or more outstanding securities, claims or
22    property interests, or partly in such exchange and partly
23    for cash, where such offer, sale or issuance is incident to
24    a reorganization, recapitalization, readjustment,
25    composition or settlement of a claim, as approved by a
26    court of competent jurisdiction of the United States, or

 

 

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1    any state.
2        K. Any offer, sale or issuance of securities for
3    patronage, or as patronage refunds, or in connection with
4    marketing agreements by cooperative associations organized
5    exclusively for agricultural, producer, marketing,
6    purchasing, or consumer purposes; and the sale of
7    subscriptions for or shares of stock of cooperative
8    associations organized exclusively for agricultural,
9    producer, marketing, purchasing, or consumer purposes, if
10    no commission or other remuneration is paid or given
11    directly or indirectly for or on account of such
12    subscription, sale or resale, and if any person does not
13    own beneficially more than 5% of the aggregate amount of
14    issued and outstanding capital stock of such cooperative
15    association.
16        L. Offers for sale or solicitations of offers to buy
17    (but not the acceptance thereof), of securities which are
18    the subject of a pending registration statement filed under
19    the Federal 1933 Act and which are the subject of a pending
20    application for registration under this Act.
21        M. Any offer or sale of preorganization subscriptions
22    for any securities prior to the incorporation,
23    organization or formation of any issuer under the laws of
24    the United States, or any state, or the issuance by such
25    issuer, after its incorporation, organization or
26    formation, of securities pursuant to such preorganization

 

 

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1    subscriptions, provided the number of subscribers does not
2    exceed 25 and either (1) no commission or other
3    remuneration is paid or given directly or indirectly for or
4    on account of such sale or sales or issuance, or (2) if any
5    commission or other remuneration is paid or given directly
6    or indirectly for or on account of such sale or sales or
7    issuance, the securities are not offered or sold by any
8    means of general advertising or general solicitation in
9    this State.
10        N. The execution of orders for purchase of securities
11    by a registered salesperson and dealer, provided such
12    persons act as agent for the purchaser, have made no
13    solicitation of the order to purchase the securities, have
14    no direct interest in the sale or distribution of the
15    securities ordered, receive no commission, profit, or
16    other compensation other than the commissions involved in
17    the purchase and sale of the securities and deliver to the
18    purchaser written confirmation of the order which clearly
19    identifies the commissions paid to the registered dealer.
20        O. Any offer, sale or issuance of securities, other
21    than fractional undivided interests in an oil, gas or other
22    mineral lease, right or royalty, for the direct or indirect
23    benefit of the issuer thereof, or of a controlling person,
24    whether through a dealer (acting either as principal or
25    agent) or otherwise, if the securities sold, immediately
26    following the sale or sales, together with securities

 

 

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1    already owned by the purchaser, would constitute 50% or
2    more of the equity interest of any one issuer, provided
3    that the number of purchasers is not more than 5 and
4    provided further that no commission, discount or other
5    remuneration exceeding 15% of the aggregate sale price of
6    the securities is paid or given directly or indirectly for
7    or on account of the sale or sales.
8        P. Any offer, sale or issuance of securities (except
9    face amount certificate contracts and investment fund
10    shares) issued by and representing an interest in an issuer
11    which is a business corporation incorporated under the laws
12    of this State, the purposes of which are to provide capital
13    and supervision solely for the redevelopment of blighted
14    urban areas located in a municipality in this State and
15    whose assets are located entirely within that
16    municipality, provided: (1) no commission, discount or
17    other remuneration is paid or given directly or indirectly
18    for or on account of the sale or sales of such securities;
19    (2) the aggregate amount of any securities of the issuer
20    owned of record or beneficially by any one person will not
21    exceed the lesser of $5,000 or 4% of the equity
22    capitalization of the issuer; (3) the officers and
23    directors of the corporation have been bona fide residents
24    of the municipality not less than 3 years immediately
25    preceding the effectiveness of the offering sheet for the
26    securities under this subsection P; and (4) the issuer

 

 

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1    files with the Secretary of State an offering sheet
2    descriptive of the securities setting forth:
3            (a) the name and address of the issuer;
4            (b) the title and total amount of securities to be
5        offered;
6            (c) the price at which the securities are to be
7        offered; and
8            (d) such additional information as the Secretary
9        of State may prescribe by rule and regulation.
10        The Secretary of State shall within a reasonable time
11    examine the offering sheet so filed and, unless the
12    Secretary of State shall make a determination that the
13    offering sheet so filed does not conform to the
14    requirements of this subsection P, shall declare the
15    offering sheet to be effective, which offering sheet shall
16    continue effective for a period of 12 months from the date
17    it becomes effective. The fee for examining the offering
18    sheet shall be as established pursuant to Section 11a of
19    this Act, and shall not be returnable in any event. The
20    Secretary of State shall by rule or regulation require the
21    filing of a report or reports of sales made to residents of
22    this State in reliance upon the exemption provided by this
23    subsection P and prescribe the form of such report and the
24    time within which such report shall be filed. The Secretary
25    of State shall prescribe by rule or regulation the amount
26    of the fee for filing any such report, but such fee shall

 

 

10000HB3791ham001- 17 -LRB100 07306 JLS 24077 a

1    not be less than the minimum amount nor more than the
2    maximum amount established pursuant to Section 11a of this
3    Act, and shall not be returnable in any event. The
4    Secretary of State may impose, in such cases as he or she
5    may deem appropriate, a penalty for failure to file any
6    such report in a timely manner, but no such penalty shall
7    exceed an amount equal to five times the filing fee. The
8    contents of any such report shall be deemed confidential
9    and shall not be disclosed to the public except by order of
10    court or in court proceedings. The failure to file any such
11    report shall not affect the availability of such exemption,
12    but such failure to file any such report shall constitute a
13    violation of subsection D of Section 12 of this Act,
14    subject to the penalties enumerated in Section 14 of this
15    Act. The civil remedies provided for in subsection A of
16    Section 13 of this Act and the civil remedies of rescission
17    and appointment of a receiver, conservator, ancillary
18    receiver or ancillary conservator provided for in
19    subsection F of Section 13 of this Act shall not be
20    available against any person by reason of the failure to
21    file any such report or on account of the contents of any
22    such report.
23        Q. Any isolated transaction, whether effected by a
24    dealer or not.
25        R. Any offer, sale or issuance of a security to any
26    person who purchases at least $150,000 of the securities

 

 

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1    being offered, where the purchaser's total purchase price
2    does not, or it is reasonably believed by the person
3    relying upon this subsection R that said purchase price
4    does not, exceed 20 percent of the purchaser's net worth at
5    the time of sale, or if a natural person a joint net worth
6    with that person's spouse, for one or any combination of
7    the following: (i) cash, (ii) securities for which market
8    quotations are readily available, (iii) an unconditional
9    obligation to pay cash or securities for which quotations
10    are readily available, which obligation is to be discharged
11    within five years of the sale of the securities to the
12    purchaser, or (iv) the cancellation of any indebtedness
13    owed by the issuer to the purchaser; provided that such
14    security is not offered or sold by means of any general
15    advertising or general solicitation in this State.
16        S. Any offer, sale or issuance of a security to any
17    person who is, or who is reasonably believed by the person
18    relying upon this subsection S to be, a director, executive
19    officer, or general partner of the issuer of the securities
20    being offered or sold, or any director, executive officer,
21    or general partner of a general partner of that issuer. For
22    purposes of this subsection S, "executive officer" shall
23    mean the president, any vice president in charge of a
24    principal business unit, division or function (such as
25    sales, administration or finance), any other officer who
26    performs a policy making function, or any other person who

 

 

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1    performs similar policy making functions for the issuer.
2    Executive officers of subsidiaries may be deemed executive
3    officers of the issuer if they perform such policy making
4    functions for the issuer.
5        A document being filed pursuant to this Section 4 shall
6    be deemed filed, and any fee paid pursuant to this Section
7    4 shall be deemed paid, upon the date of actual receipt
8    thereof by the Secretary of State.
9        T. An offer or sale of a security, by an issuer that is
10    organized and, as of the time of the offer and the time of
11    sale is , in good standing under the laws of the State of
12    Illinois and that is , made solely to persons or entities
13    that are, as of the time of the offer and time of sale,
14    residents of the State of Illinois, subject to the
15    following provided:
16            (1) The offering is made in compliance with the
17        requirements of meets all of the requirements of the
18        federal exemption for intrastate offerings provided in
19        Section 3(a)(11) of the Securities Act of 1933 (15
20        U.S.C. 77c(a)(11)) and Rule 147 adopted under the
21        Securities Act of 1933 (17 CFR 230.147), Rule 147A (17
22        CFR 230.147A), or any other federal exemption
23        providing for intrastate offerings from time to time in
24        effect.
25            (2) The aggregate purchase price of all securities
26        sold by an issuer in reliance on the exemption under

 

 

10000HB3791ham001- 20 -LRB100 07306 JLS 24077 a

1        this subsection, within any 12-month period, does not
2        exceed: (i) $1,000,000; or (ii) $4,000,000 if the
3        issuer has undergone and made available (directly, or
4        through a registered Internet portal), to each
5        prospective purchaser and the Secretary of State,
6        copies of its most recent financial statements which
7        have been audited by an independent auditor and
8        certified by a senior officer of the issuer as fairly,
9        completely, and accurately presenting the financial
10        condition of the issuer, in all material respects, as
11        of the dates indicated therein. Amounts received in
12        connection with any offer or sale to any accredited
13        investor or any of the following shall not count toward
14        the calculation of the foregoing monetary limitations:
15                (a) any entity (including, without limitation,
16            any trust) in which all of the equity interests are
17            owned by (or with respect to any trust, the primary
18            beneficiaries are) persons who are accredited
19            investors or who meet one or more of the criteria
20            in subparagraphs (b) through (d) of this paragraph
21            (2);
22                (b) with respect to participating in an
23            offering of a particular issuer, a natural person
24            serving as an officer, director, partner, or
25            trustee of, or otherwise occupying similar status
26            or performing similar functions with respect to,

 

 

10000HB3791ham001- 21 -LRB100 07306 JLS 24077 a

1            such issuer;
2                (c) with respect to participating in an
3            offering of a particular issuer, a natural person
4            or entity who owns 10% or more of the then
5            aggregate outstanding voting capital securities of
6            such issuer; or
7                (d) such other person or entity as the
8            Secretary of State may hereafter exempt by rule.
9            The Secretary of State may hereafter cumulatively
10        increase the dollar limitations provided in this
11        paragraph (2).
12            (3) The aggregate amount sold by an issuer to any
13        purchaser (other than an accredited investor or a
14        person or entity which meets one or more of the
15        criteria in subparagraphs (a) through (d) of paragraph
16        (2) of this subsection T) in an offering of securities
17        made in reliance on the exemption provided in this
18        subsection T, within any consecutive 12-month period,
19        does not exceed $5,000.
20            (4) The Secretary of State shall establish by rule
21        the duties of the issuer including disclosure and
22        filing requirements, treatment of escrow funds and
23        agreements, production of financial statements, and
24        other requirements as deemed necessary.
25            (5) The issuer has made available, to each
26        prospective purchaser and the Secretary of State,

 

 

10000HB3791ham001- 22 -LRB100 07306 JLS 24077 a

1        copies of its most recent financial statements
2        personally certified by one or more senior officers of
3        the issuer as fairly, completely, and accurately
4        presenting the financial condition of the issuer, in
5        all material respects, as of the dates indicated
6        therein.
7            (6) No commission or other remuneration is paid or
8        given directly or indirectly to any person or entity
9        (including, without limitation, any registered
10        Internet portal) for soliciting any investor, other
11        than such payments made person in this State, except to
12        registered dealers and registered salespersons
13        licensed in this State and such finder fees and other
14        payments now or hereafter permitted under applicable
15        federal law or a United States Securities and Exchange
16        Commission rule or interpretive letter.
17            (7) Not less than 15 days before the earlier of the
18        first sale of securities made in reliance on the
19        exemption provided in this subsection T, or the use of
20        any general solicitation with respect thereto (other
21        than a general announcement made by or on behalf of),
22        an issuer shall file a notice filing with the Secretary
23        of State together with such other forms, materials, and
24        fees as required by the Secretary of State by rule.
25            The Secretary of State shall prescribe by rule the
26        amount of the fee for filing the notice filing required

 

 

10000HB3791ham001- 23 -LRB100 07306 JLS 24077 a

1        under this subsection, but the fee shall not be less
2        than the minimum amount nor more than the maximum
3        amount in subparagraph (a), established under pursuant
4        to Section 11a of this Act and shall not be returnable
5        in any event. The Secretary of State may impose, in
6        such cases as the Secretary he or she may deem
7        appropriate, a penalty for failure to file any such
8        notice in a timely manner, but no such penalty shall
9        exceed an amount equal to 5 times the filing fee. The
10        contents of any such notice or portion thereof may be
11        deemed confidential by the Secretary of State by rule
12        or order and if so deemed shall not be disclosed to the
13        public except by order of court or in court
14        proceedings. The failure to file any such notice does
15        not affect the availability of such exemption, but such
16        failure to file any such report constitutes a violation
17        of subsection D of Section 12 of this Act and is
18        subject to the penalties and remedies available in this
19        Act and under the law.
20            (8) All payments for purchase of securities
21        offered pursuant to the exemption provided under this
22        subsection T are made directly to, and held by, a the
23        qualified escrowee identified in the escrow agreement
24        required pursuant to subparagraph (c) of paragraph
25        (4).
26            (9) The issuer includes each of the following in

 

 

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1        one or more of the offering materials delivered to a
2        prospective purchaser, or to which a prospective
3        purchaser has been granted electronic access, in
4        connection with the offering:
5                (a) a description of the issuer, its type of
6            entity, the address, and telephone number of its
7            principal office;
8                (b) a reasonably detailed description of the
9            intended use of the offering proceeds, including
10            any amounts to be paid, as compensation or
11            otherwise, to any owner, executive officer,
12            director, managing member, or other person
13            occupying a similar status or performing similar
14            functions on behalf of the issuer;
15                (c) the identity of all persons owning more
16            than 20% 10% of the voting capital securities of
17            the issuer;
18                (d) the identity of the executive officers,
19            directors, managing members, and other persons
20            occupying a similar status or performing similar
21            functions in the name of and on behalf of the
22            issuer, including their titles and a reasonably
23            detailed description of their prior experience;
24                (e) the identity of any person or entity who
25            has been or will be retained by the issuer to
26            assist the issuer in conducting the offering and

 

 

10000HB3791ham001- 25 -LRB100 07306 JLS 24077 a

1            sale of the securities (including all registered
2            Internet portals but excluding persons acting
3            solely as accountants or attorneys and employees
4            whose primary job responsibilities involve the
5            operating business of the issuer rather than
6            assisting the issuer in raising capital) and a
7            description of the consideration being paid to
8            each such person or entity for such assistance;
9                (e-5) to the extent the issuer is an affiliate
10            or related party of the registered Internet portal
11            being used to conduct the offering, a reasonably
12            detailed description of the relationship between
13            the parties;
14                (f) any additional information material to the
15            offering, including a description of significant
16            factors that make the offering speculative or
17            risky for the purchaser;
18                (g) (blank). the information required pursuant
19            to subparagraphs (a) and (b) of paragraph (4) of
20            this subsection T;
21                (h) such other information as the Secretary of
22            State may hereafter require by rule.
23            (10) The issuer (directly or through a registered
24        Internet portal) requires each purchaser to certify,
25        in writing or electronically, that the purchaser:
26                (a) is a resident of the State of Illinois;

 

 

10000HB3791ham001- 26 -LRB100 07306 JLS 24077 a

1                (b) understands that the purchaser he or she is
2            investing in a high-risk, highly speculative,
3            business venture, that the purchaser he or she may
4            lose all of the his or her investment, and that the
5            purchaser that he or she can afford such a loss of
6            the his or her investment;
7                (c) understands that the securities being
8            offered are highly illiquid, that there is no ready
9            market for the sale of such securities, that it may
10            be difficult or impossible for purchaser to sell or
11            otherwise dispose of such securities, and (where
12            applicable) that purchaser may be required to hold
13            the securities for an indefinite period of time;
14            and
15                (d) understands that purchaser may be subject
16            to the payment of certain taxes with respect to the
17            securities being purchased whether or not
18            purchaser has sold, or otherwise disposed of, such
19            securities or whether purchaser has received any
20            distributions or other amounts from the issuer.
21            (11) The issuer (directly or through a registered
22        Internet portal) obtains from each purchaser of a
23        security offered under this subsection T evidence that
24        the purchaser is a resident of this State and, if
25        applicable, is an accredited investor. Without
26        limiting the generality of the foregoing, and not to

 

 

10000HB3791ham001- 27 -LRB100 07306 JLS 24077 a

1        the exclusion of other reasonable methods which may be
2        used by the issuer in connection with the foregoing, an
3        issuer may rely on any evidence permitted under the
4        applicable federal exemption relied upon pursuant to
5        paragraph (1) of this subsection T.
6            (12) The issuer (and to the extent a registered
7        Internet portal is used, such registered Internet
8        portal) maintains records of all offers and sales of
9        securities made pursuant to the exemption granted by
10        this subsection T and provides ready access to such
11        records to the Secretary of State, upon notice from the
12        Secretary of State.
13            (13) The issuer is not, either before or as a
14        result of the offering:
15                (a) an investment company, as defined in
16            Section 3 of the Investment Company Act of 1940 (15
17            U.S.C. 80a-3), as amended and in effect (unless the
18            issuer qualifies for exemption from the terms
19            thereof exclusion from such definition pursuant
20            to: one or more of the exceptions provided in
21            Section 3(c) of the Investment Company Act of
22            1940; , any other provision of the Investment
23            Company Act of 1940; , or any United States
24            Securities and Exchange Commission administrative
25            rule, regulation, or interpretive letter ruling
26            rule or regulation promulgated with respect to the

 

 

10000HB3791ham001- 28 -LRB100 07306 JLS 24077 a

1            Investment Company Act of 1940 or in connection
2            therewith; or any other applicable federal
3            regulation or exemption); or
4                (b) subject to the reporting requirements of
5            Section 13 or 15(d) of the Securities Exchange Act
6            of 1934 (15 U.S.C. 78m or 15 U.S.C. 78o(d).
7            (14) Neither the issuer, nor any person owning more
8        than 20% of the voting capital securities of the issuer
9        affiliated with the issuer (either before or as a
10        result of the offering), nor the offering itself, nor
11        the registered Internet portal (to the extent used) is
12        subject to disqualification established by the
13        Secretary of State by rule or contained in the
14        applicable federal exemption relied upon pursuant to
15        paragraph (1) of this subsection T the Securities Act
16        of 1933 (15 U.S.C. 77c(a)(11)) and Rule 147 adopted
17        under the Securities Act of 1933 (17 CFR 230.147),
18        unless both of the following are met:
19                (a) on a showing of good cause and without
20            prejudice to any other action by the Secretary of
21            State, the Secretary of State determines that it is
22            not necessary under the circumstances that an
23            exemption is denied; and
24                (b) the issuer establishes that it made a
25            factual inquiry into whether any disqualification
26            existed under this paragraph (14), but did not

 

 

10000HB3791ham001- 29 -LRB100 07306 JLS 24077 a

1            know, and in the exercise of reasonable care could
2            not have known, that a disqualification existed
3            under this paragraph (14); the nature and scope of
4            the requisite inquiry will vary based on the
5            circumstances of the issuer and the other offering
6            participants.
7            (15) A separate investment vehicle may be used to
8        aggregate investments in the offering being made by an
9        issuer under this Section provided that such separate
10        investment vehicle is permitted pursuant to federal
11        law or the rules or an interpretive letter of the
12        United States Securities and Exchange Commission. The
13        Secretary shall adopt rules consistent with federal
14        law, rules, or interpretive opinions regarding such
15        separate investment vehicles. For purposes of
16        determining compliance with the provisions of this
17        subsection T and the related administrative rules,
18        such investment vehicle shall be disregarded and the
19        subject offering shall be assessed as if the issuer had
20        made a direct offering to the participating investors.
21        Such separate investment vehicle shall not be
22        considered as an entity qualifying under subparagraph
23        (c) of paragraph (2) of this subsection T for purposes
24        of calculating the purchase price totals permitted
25        under the exemption. The Secretary of State may
26        establish by rule the duties of the separate investment

 

 

10000HB3791ham001- 30 -LRB100 07306 JLS 24077 a

1        vehicle under this subsection including the production
2        of financial statements, maintenance of certain books
3        and records of the separate investment vehicle, and
4        other requirements as deemed necessary.
5(Source: P.A. 99-182, eff. 1-1-16.)
 
6    (815 ILCS 5/8d)
7    Sec. 8d. Offerings made through registered Internet
8portals.
9    (a) An issuer shall make an offering or sale of securities
10pursuant to subsection T of Section 4 of this Act through the
11use of one or more registered Internet portals.
12    (b) The Internet portal:
13        (1) shall be a registered broker-dealer under the
14    Securities Exchange Act of 1934 (15 U.S.C. 78o);
15        (2) shall be a funding portal registered under the
16    Securities Act of 1933 (15 U.S.C. 77d-1) and the Securities
17    and Exchange Commission has adopted rules under authority
18    of Section 3(h) of the Securities Exchange Act of 1934 (15
19    U.S.C. 78c) and Section 304 of the Jumpstart Our Business
20    Startups Act (P.L. 112-106) governing funding portals;
21        (3) shall be a dealer registered under this Act as of
22    the date of any offer or sale of securities made through
23    the Internet portal; or
24        (4) shall, to the extent it meets the qualifications
25    for exemption from registration pursuant to subsection (d)

 

 

10000HB3791ham001- 31 -LRB100 07306 JLS 24077 a

1    of this Section:
2            (A) file, not later than 30 days before the date of
3        the first offer or sale of securities made within this
4        State, an application for registration (or renewal of
5        registration, as applicable) as a registered Internet
6        portal with the Secretary of State, in writing or in
7        electronic form as prescribed by the Secretary of
8        State, which the Secretary of State shall make
9        available as an electronic document on the Secretary of
10        State's Internet website, containing such information
11        and required deliveries as specified therein; and
12            (B) pay the application filing fee established
13        under Section 11a of this Act; the Secretary of State
14        shall, within a reasonable time, examine the filed
15        application and other materials filed and, approve or
16        deny the application.
17    (c) If any change occurs in the information submitted by,
18or on behalf of, an Internet portal to the Secretary of State,
19the Internet portal shall notify the Secretary of State within
2010 days after such change occurs and shall provide the
21Secretary of State with such additional information (if any)
22requested by the Secretary of State in connection therewith.
23    (d) Notwithstanding anything contained in this Act to the
24contrary, neither an Internet portal nor its owning or
25operating entity is required to register as a dealer or an
26investment advisor under this Act if each of the following

 

 

10000HB3791ham001- 32 -LRB100 07306 JLS 24077 a

1applies with respect to the Internet portal and its owning or
2operating entity:
3        (1) It does not solicit purchases, sales, or offers to
4    buy the securities offered or displayed on the Internet
5    portal.
6        (2) It does not collect or hold funds in connection
7    with any purchase, sale, or offer to buy any securities
8    offered or displayed on the Internet portal.
9        (3) It does not compensate employees, agents, or other
10    persons for the solicitation or based on the sale of
11    securities displayed or referenced on the Internet portal.
12        (4) It is not compensated based on the amount of
13    securities sold.
14        (5) The fee it charges an issuer for an offering of
15    securities on the Internet portal is a fixed amount for
16    each offering, a variable amount based on the length of
17    time that the securities are offered on the Internet
18    portal, a variable amount based on the total proposed
19    offering amount, or any combination of such fixed and
20    variable amounts.
21        (6) It does not offer investment advice or
22    recommendations; however, an Internet portal is not deemed
23    to be offering investment advice or recommendations simply
24    by virtue of:
25            (A) selecting transactions in which the Internet
26        portal shall serve as an intermediary;

 

 

10000HB3791ham001- 33 -LRB100 07306 JLS 24077 a

1            (B) establishing reasonable selection criteria for
2        an issuer to meet in order to establish an offer or
3        sale of securities through the Internet portal;
4            (C) establishing reasonable selection criteria for
5        a potential purchaser to meet in order to participate
6        in an offer or sale of securities made through the
7        Internet portal; or
8            (D) terminating an issuer transaction at any time
9        before the first sale of the securities of such issuer
10        if the Internet portal determines such action is
11        appropriate, after reasonable due diligence, to
12        protect potential purchasers, and the Internet portal
13        is able to direct the qualified escrowee to return all
14        funds then provided by potential purchasers, if any.
15        (7) It does not engage in such other activities as the
16    Secretary of State, by rule, determines are prohibited.
17    (e) Upon completion of an offering made pursuant to
18subsection T of Section 4, each registered Internet portal
19involved with the transactions (and the issuer, to the extent
20applicable) shall store any and all electronic materials
21related to the completed offering (including copies of all
22offering documents, all offering materials, and all purchaser
23information) on a secure, non-public, server or in such other
24manner as the Secretary of State may hereafter deem acceptable
25by rule.
26    (f) Notwithstanding anything contained in this Act to the

 

 

10000HB3791ham001- 34 -LRB100 07306 JLS 24077 a

1contrary, in connection with any offering or sale of securities
2pursuant to subsection T of Section 4 of this Act, the hosting
3registered Internet portal may elect, in its discretion, to
4accept as compensation (in whole or part) for the services
5provided in connection with the subject offering:
6        (1) such equity in, or other securities issued by,
7    issuer on the Internet portal as part of the subject
8    offering; or
9        (2) equity in, or other securities issued by, issuer of
10    any kind, provided that any right to distribution or
11    payment with respect to such class of equity or other
12    securities received by the registered Internet portal be
13    equal, or junior, in terms of priority to the distribution
14    and payment rights, as applicable, of the securities being
15    offered on the Internet portal as part of the subject
16    offering.
17(Source: P.A. 99-182, eff. 1-1-16.)".