| 3 | 2 | | *ANS121* 02/12/2025 2:39:07 PM ANS121 |
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| 4 | 3 | | State of Arkansas 1 |
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| 5 | 4 | | 95th General Assembly A Bill 2 |
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| 6 | 5 | | Regular Session, 2025 SENATE BILL 220 3 |
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| 7 | 6 | | 4 |
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| 8 | 7 | | By: Senator J. Boyd 5 |
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| 9 | 8 | | By: Representative Achor 6 |
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| 10 | 9 | | 7 |
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| 11 | 10 | | For An Act To Be Entitled 8 |
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| 12 | 11 | | AN ACT TO AMEND THE ARKANSAS SECURITIES ACT; TO 9 |
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| 13 | 12 | | CLARIFY EXEMPT TRANSACTIONS UNDER THE ARKANSAS 10 |
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| 14 | 13 | | SECURITIES ACT; AND FOR OTHER PURPOSES. 11 |
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| 15 | 14 | | 12 |
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| 16 | 15 | | 13 |
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| 17 | 16 | | Subtitle 14 |
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| 18 | 17 | | TO AMEND THE ARKANSAS SECURITIES ACT; 15 |
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| 19 | 18 | | AND TO CLARIFY EXEMPT TRANSACTIONS UNDER 16 |
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| 20 | 19 | | THE ARKANSAS SECURITIES ACT. 17 |
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| 21 | 20 | | 18 |
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| 22 | 21 | | BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 19 |
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| 23 | 22 | | 20 |
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| 24 | 23 | | SECTION 1. DO NOT CODIFY. This act shall be known and may be cited as 21 |
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| 25 | 24 | | the "Invest Arkansas Exemption Act". 22 |
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| 26 | 25 | | 23 |
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| 27 | 26 | | SECTION 2. Arkansas Code § 23 -42-504(a)(12), concerning an exempt 24 |
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| 28 | 27 | | transaction that is an offer or sale of a security by an issuer under the 25 |
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| 29 | 28 | | Arkansas Securities Act, is amended to read as follows: 26 |
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| 30 | 29 | | (12) An offer or sale of a security by an issuer if the offer or 27 |
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| 31 | 30 | | sale of the security is conducted according to the following : 28 |
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| 32 | 31 | | (A) Either of the following applies: 29 |
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| 33 | 32 | | (i) The issuer of the security is a corporation or 30 |
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| 34 | 33 | | other business entity organized and operating for-profit business entity 31 |
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| 35 | 34 | | formed under the laws of this state and has its principal place of business 32 |
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| 36 | 35 | | in Arkansas and is registered with the Secretary of State; 33 |
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| 37 | 36 | | (B) the The transaction meets the requirements of the 34 |
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| 38 | 37 | | federal exemption for intrastate offerings in either: 35 |
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| 39 | 38 | | (i) section Section 3(a)(11) of the Securities Act 36 SB220 |
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| 40 | 39 | | |
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| 41 | 40 | | 2 02/12/2025 2:39:07 PM ANS121 |
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| 42 | 41 | | of 1933, 15 U.S.C. § 77c(a)(11), as it existed on January 1, 2017 January 1, 1 |
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| 43 | 42 | | 2025, and Rule 147 of the United States Securities and Exchange Commission, 2 |
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| 44 | 43 | | 17 C.F.R. § 230.147, as it existed on January 1, 2017, and as such, the 3 |
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| 45 | 44 | | securities shall be offered to and sold only to persons who are residents of 4 |
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| 46 | 45 | | this state at the time of purchase January 1, 2025; or 5 |
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| 47 | 46 | | (ii) The issuer of the security is a corporation or 6 |
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| 48 | 47 | | other business entity with its principal place of business in Arkansas and 7 |
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| 49 | 48 | | the transaction meets the requirements of the federal exemption for 8 |
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| 50 | 49 | | intrastate offerings in section 28 of the Securities Exchange Act of 1933, 15 9 |
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| 51 | 50 | | U.S.C. § 77z-3, as it existed on January 1, 2017, and Rule 147A of the United 10 |
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| 52 | 51 | | States Securities and Exchange Commission, 17 C.F.R. § 230.147A, as it 11 |
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| 53 | 52 | | existed on January 1, 2017, and as such, the securities shall be sold only to 12 |
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| 54 | 53 | | persons who are residents of this state at the time of purchase January 1, 13 |
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| 55 | 54 | | 2025; 14 |
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| 56 | 55 | | (B)(C) The sum of all cash and other consideration to be 15 |
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| 57 | 56 | | received for all sales of the security in reliance upon the exemption 16 |
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| 58 | 57 | | described in this subdivision (a)(12) shall not exceed one million dollars 17 |
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| 59 | 58 | | ($1,000,000) ten million dollars ($10,000,000) , less the aggregate amount 18 |
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| 60 | 59 | | received for all sales of securities by the issuer within six (6) months 19 |
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| 61 | 60 | | after the completion of the offering twelve (12) months before the first 20 |
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| 62 | 61 | | offer or sale made in reliance upon this exemption ; 21 |
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| 63 | 62 | | (C)(D)(i) The issuer shall not accept more than five 22 |
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| 64 | 63 | | thousand dollars ($5,000) one hundred thousand dollars ($100,000) from any 23 |
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| 65 | 64 | | single purchaser unless the purchaser is an accredited investor as defined by 24 |
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| 66 | 65 | | Rule 501 of United States Securities and Exchange Commission Regulation D, 17 25 |
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| 67 | 66 | | C.F.R. § 230.501, as it existed on January 1, 2017 January 1, 2025. 26 |
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| 68 | 67 | | (ii) Two (2) or more individual purchasers residing 27 |
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| 69 | 68 | | at the same primary residence who are not accredited investors and have a 28 |
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| 70 | 69 | | close family relationship shall be treated as a single purchaser for purposes 29 |
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| 71 | 70 | | of the monetary limit under subdivision (a)(12)(D)(i) of this section ; 30 |
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| 72 | 71 | | (D) The issuer should reasonably believe that all 31 |
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| 73 | 72 | | purchasers of securities are purchasing for investment and not for sale in 32 |
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| 74 | 73 | | connection with a distribution of the security; 33 |
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| 75 | 74 | | (E) A commission or remuneration shall not be paid or 34 |
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| 76 | 75 | | given, directly or indirectly, for a person's participation in the offer or 35 |
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| 77 | 76 | | sale of securities for the issuer unless the person is registered as a 36 SB220 |
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| 78 | 77 | | |
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| 80 | 79 | | broker-dealer or agent under this chapter All funds received from investors 1 |
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| 81 | 80 | | shall: 2 |
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| 82 | 81 | | (i) Be deposited into a bank as defined in § 23 -45-3 |
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| 83 | 82 | | 102(a)(5)(A) authorized to do business in this state; and 4 |
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| 84 | 83 | | (ii) Used according to the representations made to 5 |
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| 85 | 84 | | investors; 6 |
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| 86 | 85 | | (F)(i) The commissioner may by rule or order, as to any 7 |
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| 87 | 86 | | security or transaction or any type of security or transaction, withdraw or 8 |
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| 88 | 87 | | further condition the exemption under this subdivision (a)(12) The issuer 9 |
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| 89 | 88 | | shall file a proof of exemption with the commissioner in writing at least ten 10 |
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| 90 | 89 | | (10) days before securities are sold. 11 |
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| 91 | 90 | | (ii) The proof of exemption under subdivision 12 |
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| 92 | 91 | | (a)(12)(F)(i) of this section shall specify that the issuer is conducting an 13 |
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| 93 | 92 | | offering in reliance of the exemption under this subdivision (a)(12). 14 |
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| 94 | 93 | | (iii) The proof of exemption under subdivision 15 |
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| 95 | 94 | | (a)(12)(F)(i) of this section shall contain: 16 |
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| 96 | 95 | | (a) The name and address of the issuer; 17 |
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| 97 | 96 | | (b) The name and address of all persons who 18 |
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| 98 | 97 | | will be involved in the offer or sale of securities on behalf of the issuer; 19 |
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| 99 | 98 | | (c) The name and address of the bank as 20 |
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| 100 | 99 | | defined in § 23-45-102(a)(5)(A) into which investor funds will be deposited ; 21 |
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| 101 | 100 | | and 22 |
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| 102 | 101 | | (d) A copy of the offering documents to be 23 |
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| 103 | 102 | | provided to each prospective purchaser in connection with the offering. 24 |
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| 104 | 103 | | (G)(iv) A The issuer shall pay a filing fee of one 25 |
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| 105 | 104 | | hundred dollars ($100) shall be paid to the commissioner for every proof of 26 |
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| 106 | 105 | | exemption filed with the commissioner under this subdivision (a)(12) 27 |
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| 107 | 106 | | (a)(12)(F)(i) of this section ;. 28 |
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| 108 | 107 | | (v) If the information contained in the proof of 29 |
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| 109 | 108 | | exemption filed with the commissioner under subdivision (a)(12)(F)(i) of this 30 |
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| 110 | 109 | | section becomes inaccurate for any reason, the issuer shall file an amendment 31 |
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| 111 | 110 | | in writing with the commissioner within sixty (60) days; 32 |
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| 112 | 111 | | (G) The issuer shall inform all purchasers that the 33 |
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| 113 | 112 | | securities have not been registered under this chapter and cannot be resold 34 |
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| 114 | 113 | | unless the securities are: 35 |
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| 115 | 114 | | (i) Registered or qualify for an exemption from 36 SB220 |
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| 116 | 115 | | |
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| 118 | 117 | | registration under this section and §§ 23 -42-501 — 503; and 1 |
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| 119 | 118 | | (ii) Subject to the limitation on resales contained 2 |
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| 120 | 119 | | in either: 3 |
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| 121 | 120 | | (a) Subsection (e) of Rule 147 of the United 4 |
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| 122 | 121 | | States Securities and Exchange Commission, 17 C.F.R. 230.147(e), as it 5 |
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| 123 | 122 | | existed on January 1, 2025, and in the manner described in subsection (f) of 6 |
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| 124 | 123 | | Rule 147 of the United States Securities and Exchange Commission, 17 C.F.R. 7 |
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| 125 | 124 | | 230.147(f), as it existed on January 1, 2025; or 8 |
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| 126 | 125 | | (b) Subsection (e) of Rule 147(A) of the 9 |
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| 127 | 126 | | United States Securities and Exchange Commission, 17 C.F.R. 230.147A(e), as 10 |
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| 128 | 127 | | it existed on January 1, 2025, and in the manner described in subsection (f) 11 |
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| 129 | 128 | | of Rule 147A of the United States Securities and Exchange Commission, 17 12 |
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| 130 | 129 | | C.F.R. 230.147(A)(f), as it existed on January 1, 2025; 13 |
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| 131 | 130 | | (H) A commission or other remuneration shall not be paid 14 |
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| 132 | 131 | | or given, directly or indirectly, for any person’s participation in the offer 15 |
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| 133 | 132 | | or sale of securities for the issuer unless the person is registered as a 16 |
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| 134 | 133 | | broker-dealer or agent under this chapter or a funding portal registered with 17 |
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| 135 | 134 | | the Financial Industry Regulatory Authority; 18 |
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| 136 | 135 | | (I) The issuer shall not be, either before or as a result 19 |
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| 137 | 136 | | of the offering: 20 |
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| 138 | 137 | | (i) An investment company as defined in Section 3 of 21 |
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| 139 | 138 | | the Investment Company Act of 1940, 15 U.S.C. § 80a -3, as it existed on 22 |
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| 140 | 139 | | January 1, 2025; 23 |
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| 141 | 140 | | (ii) Subject to the reporting requirements of: 24 |
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| 142 | 141 | | (a) Section 13 of the Securities and Exchange 25 |
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| 143 | 142 | | Act of 1934, 15 U.S.C. § 78m, as it existed on January 1, 2025; or 26 |
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| 144 | 143 | | (b) Section 15(d) of the Securities and 27 |
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| 145 | 144 | | Exchange Act of 1934, 15 U.S.C. § 78o(d), as it existed on January 1, 2025; 28 |
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| 146 | 145 | | or 29 |
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| 147 | 146 | | (iii) Considered a blind pool or a company that has: 30 |
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| 148 | 147 | | (a) Not yet defined its business operations; 31 |
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| 149 | 148 | | (b) No business plan; 32 |
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| 150 | 149 | | (c) No stated investment goal for the funds 33 |
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| 151 | 150 | | being raised; or 34 |
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| 152 | 151 | | (d) Plans to engage in a merger or acquisition 35 |
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| 153 | 152 | | with an unspecified business entity; 36 SB220 |
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| 154 | 153 | | |
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| 156 | 155 | | (J) The exemption under this subdivision (a)(12) shall not 1 |
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| 157 | 156 | | be used in conjunction with any other exemption under this chapter except 2 |
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| 158 | 157 | | for: 3 |
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| 159 | 158 | | (i) The exemption to institutional investors under 4 |
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| 160 | 159 | | subdivision (a)(8) of this section; and 5 |
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| 161 | 160 | | (ii)(a) Offers and sales to controlling persons of 6 |
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| 162 | 161 | | the issuer. 7 |
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| 163 | 162 | | (b) Sales to controlling persons under 8 |
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| 164 | 163 | | subdivision (a)(12)(J)(ii)(a) of this section shall not count toward the 9 |
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| 165 | 164 | | limitation under subdivision (a)(12)(D) of this section; and 10 |
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| 166 | 165 | | (K) The exemption under this subdivision (a)(12) shall 11 |
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| 167 | 166 | | not: 12 |
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| 168 | 167 | | (i) Be available if the issuer is subject to an 13 |
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| 169 | 168 | | event that would disqualify an issuer under Rule 506(d)(1) of the United 14 |
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| 170 | 169 | | States Securities and Exchange Commission Regulation D, 17 C.F.R. § 15 |
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| 171 | 170 | | 230.506(d)(1), as it existed on January 1, 2025; or 16 |
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| 172 | 171 | | (ii) Be construed to alleviate a person from the 17 |
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| 173 | 172 | | antifraud provisions under § 23 -42-507. 18 |
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| 174 | 173 | | 19 |
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| 175 | 174 | | 20 |
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