Florida Senate Bill S0532 Analysis / Analysis

                    The Florida Senate 
BILL ANALYSIS AND FISCAL IMPACT STATEMENT 
(This document is based on the provisions contained in the legislation as of the latest date listed below.) 
Prepared By: The Professional Staff of the Committee on Banking and Insurance  
 
BILL: CS/SB 532 
INTRODUCER:  Banking and Insurance and Senator Brodeur 
SUBJECT:  Securities 
DATE: January 18, 2024 
 
 ANALYST STAFF DIRECTOR  REFERENCE  	ACTION 
1. Johnson Knudson BI Fav/CS  
2.     AEG   
3.     FP  
 
Please see Section IX. for Additional Information: 
COMMITTEE SUBSTITUTE - Substantial Changes 
 
I. Summary: 
CS/SB 532 substantially revises ch. 517, F.S., the “Securities and Investor Protection Act” (Act). 
The Office of Financial Regulation (OFR) is responsible for administering the provisions of this 
chapter. The bill is based on the recommendations contained in the report issued by the Chapter 
517 Task Force of the Business Law Section of The Florida Bar in coordination with the OFR.
1
 
The impetus for the task force is to increase the ability of small and developing Florida 
businesses to raise capital, while at the same time assuring and improving investor protections 
and enforcement measures to guard against abuse.
2
 Since ch. 517, F.S., has not been substantially 
updated in many years, the bill also incorporates many small business financing provisions 
consistent with recently adopted federal rules or legislation adopted in other states. The SB 
includes the following changes: 
 
Investor Protections 
 Revises eligibility and recovery provisions relating to the Securities Guaranty Fund (Fund), 
which was created to provide relief to victims of securities violations under ch. 517, F.S., 
who are entitled to monetary damages or restitution but cannot recover the full amount of 
such damages or restitution from the wrongdoer. 
                                                
1
 Report of the Chapter 517 Task Force of the Business Law Section of The Florida Bar, Recommendations and Analysis of 
Proposed Amendments to the Florida Securities and Investor Protection Act (Nov. 2023). The report is on file with the 
Florida Senate Committee on Banking and Insurance staff. 
2
 Id. 
REVISED:   BILL: CS/SB 532   	Page 2 
 
o The bill removes a requirement that an investor who has received a final judgement that 
is unsatisfied must make searches and inquires to ascertain the assets of the judgment 
debtor, which may result in delays. Further, the bill removes a two-year waiting period 
for payment. 
o The bill increases the amount an eligible person may recover from the Fund from 
$10,000 to $15,000, adds an exception allowing recovery of up to $25,000 if the 
person is a specified vulnerable or older adult, and increasing the aggregate limit on 
claims from $100,000 to $250,000. 
 Eliminates a registration exemption for short-term notes of $25,000 or more, which have a 
maturity date of nine months or less. This type of offering is often the subject of abusive 
efforts by persons trying to evade registration requirements through the issuance of short-term 
notes to non-accredited investors. There is no comparable provision in the Uniform Securities 
Act and currently such notes cannot be sold under federal exemptions that preempt state 
registration. 
 Excludes certain industrial revenue bonds and commercial development bonds issued by the 
United States or a state or local government from a registration exemption unless the bonds 
are guaranteed by a publicly traded entity. This exclusion is based on the increased risk to 
investors under such bonds, which depend upon revenue streams for their funding. 
 Requires a person who has six or more clients, rather than 15 or more clients, to register with 
the OFR as an investment adviser.  
 
Access to Capital Formation and Investment Options 
 Revises the regulatory provisions relating to the intrastate crowdfunding exemption. These 
changes include increasing the maximum offering limit from $1 million to $5 million, which 
is consistent with the federal crowdfunding rules and reducing the technical and regulatory 
requirements for issuers. 
 Creates the “Florida Invest Local Exemption,” a micro-offering exemption that allows an 
issuer to offer up to $500,000 in securities to residents of Florida in reliance upon the 
exemption. An issuer may not accept more than $10,000 from any single purchaser, unless 
the purchaser is an accredited investor or other specified group, for which there are no sale 
limits. The issuer may engage in general advertising and general solicitation of the offering.  
 Revises the limited offering exemption to require a disclosure regarding a purchaser’s right 
of void the transaction within three days from the date of purchase, and to allow additional 
eligible purchasers that would be excluded for purposes of the 35 purchaser limit, consistent 
with the Securities and Exchange Commission rules. 
 Creates an exemption for a nonissuer transaction with a federal covered adviser managing 
investments in excess of $100 million, which is consistent with the provisions of the Uniform 
Securities Act. 
 
Modernization of Chapter 517, F.S. 
 Adopts provisions consistent with federal rules that allow issuers to have greater access to 
potential investors through “demo-day” presentations and the pre-offering “testing the 
waters” solicitations and communications, which allows an issuer to determine whether there 
is any interest in a contemplated offering of exempt securities prior to incurring the expense 
of preparing and conducting an offering.  BILL: CS/SB 532   	Page 3 
 
 Eliminates the requirement that issuers of simplified securities offerings that use the Small 
Company Offering Registration (SCOR) must submit annual financial reports for five years.  
 Adopts provisions consistent with the integration of offering federal rule that provides offers 
and sales of securities will not be integrated if, based on the particular facts and 
circumstances, the issuer can establish that each offering either complies with the registration 
requirements of the Securities Act of 1933, or that an exemption from registration is 
available for the particular offering. 
 Adopts an exemption for accredited investors, which is consistent with the North American 
Securities Administrators Association accredited investor exemption model. The provision 
exempts offers and sales from registration if the offers and sales are made only to persons in 
Florida who are, or the issuer reasonably believes are, accredited investors. This exemption is 
an important option for small businesses attempting to raise capital. 
 Clarifies, consolidates, and reorganizes provisions within ch. 517, F.S., and adopts provisions 
consistent with the Uniform Securities Act. 
 
State Enforcement Authority 
 
 Authorizes the Attorney General to double the amount of fines from $10,000 to $20,000 in 
civil and administrative actions for securities violations targeting senior citizens, age 65 or 
older, and vulnerable adults.  
 Increases the maximum civil and administrative penalties that can be assessed in an action by 
the Attorney General pursuant to s. 517.191, F.S., from $10,000 to $20,000. 
 Establishes joint and several liability for any control person who is found to have violated 
any provision of the Act; 
 Provides that a person who knowingly and recklessly provides substantial assistance to 
another person in violation of a provision of the Act is deemed to violate the provision to the 
same extent as the person to whom such assistance was provided; 
 Allows OFR to issue and serve upon a person a cease and desist order if OFR has reason to 
believe the person violates any provision of the Act, as well as an emergency cease and desist 
order under certain circumstances; and 
 Grants OFR the authority to impose and collect an administrative fine against any person 
found to have violated any provision of the Act, which must also be deposited into the Anti-
Fraud Trust Fund. 
 
The bill has no impact on local government and may have an insignificant, negative fiscal impact 
on state government. 
II. Present Situation: 
Federal Regulation of Securities   
Securities Act of 1933 
Following the stock market crash of 1929, the Securities Act of 1933
3
 was enacted to regulate 
the offers and sales of securities. The Securities Act of 1933 requires that every offer and sale of 
                                                
3
 Public Law 73-22, as amended through P.L. 117-268, enacted December 23, 2022.  BILL: CS/SB 532   	Page 4 
 
securities be registered with the Securities and Exchange Commission (SEC), unless an 
exemption from registration is available. The Securities Act of 1933 requires issuers to disclose 
financial and other significant information regarding securities offered for public sale and 
prohibits deceit, misrepresentations, and other kinds of fraud in the sale of securities. The act 
requires issuers to disclose information deemed relevant to investors as part of the mandatory 
SEC registration of the securities that those companies offer for sale to the public.
4
  
 
Registered securities offerings, often called public offerings, are available to all types of 
investors and have more rigorous disclosure requirements. Initial public offerings (IPOs) provide 
an initial pathway for companies to raise unlimited capital from the general public through a 
registered offering. After its IPO, the company will be a public company with ongoing public 
reporting requirements.
5
 
 
By contrast, securities offerings that are exempt from SEC registration are referred to as private 
offerings and are mainly available to more sophisticated investors. The SEC exempts certain 
small offerings from registration requirements to foster capital formation by lowering the cost of 
offering securities to the public. Examples of exempt offerings
6
 include: 
 Rule 506(b) Private Placement Offerings allow companies to raise unlimited capital from 
investors with whom the company has a relationship and who meet certain wealth thresholds 
or have certain professional credentials.
7
 
 Rule 506(c) of Regulation D. General Solicitation Offerings allow companies to raise 
unlimited capital by broadly soliciting investors who meet certain wealth thresholds or have 
certain professional credentials.
8
 
 Rule 504 of Regulation D, Limited Offerings allow companies to raise up to $10 million in a 
12-month period, in many cases from investors with whom the company has a relationship.
9
 
 Regulation Crowdfunding offerings allow eligible companies to raise up to $5 million in 
investment capital in a 12-month period from investors via an online portal.
10
 
 Intrastate offerings
11
 allow companies to raise capital within a single state according to state 
law. Many states limit the offering to between $1 million and $5 million in a 12-month 
period.
12
 
 Regulation A offerings allow eligible companies to raise up to $20 million in a 12-month 
period in a Tier I offering and up to $75 million through a similar, but less extensive 
registered offering.
13
 
 
                                                
4
 Id. 
5
 SEC.gov | What does it mean to be a public company? (last visited Nov. 15, 2023). 
6
 SEC.gov | The Laws That Govern the Securities Industry (last visited Sep. 5, 2023). Security offerings of municipal, state, 
and the federal government are exempt from registration. 
7
 17 C.F.R. s. 230.506(b). 
8
 17 C.F.R. s. 230.506(c). 
9
 17 C.F.R. s. 230.504. 
10
 17 C.F.R. s. 227.100. Florida’s intrastate crowdfunding law, s. 517.0611, F.S., has not been updated since it was created to 
reflect to reflect the increase in the maximum offering from $1 million to $5 million pursuant to federal rules. 
11
  Section (3)(a)(11) of the Securities Act of 1933, 17 C.F.R. s. 230.147 and 17 C.F.R. s. 230.147A 
12
 SEC, Overview of Capital-Raising Exemptions, https://www.sec.gov/files/rules/final/2020/33-10884.pdf (last visited Sep. 
19, 2023). 
13
 17 C.F.R. s. 230.251.  BILL: CS/SB 532   	Page 5 
 
Securities and Exchange Act of 1934 
The Securities and Exchange Act of 1934 created the SEC as an independent agency to enforce 
federal securities laws.
14
 The SEC oversees federal securities laws
15
 broadly aimed at protecting 
investors; maintaining fair, orderly, and efficient markets; and facilitating capital formation.
16
 
The SEC has broad regulatory authority over significant parts of the securities industry, 
including stock exchanges, mutual funds, investment advisers, brokerage firms, as well as 
securities self-regulatory organizations (SROs), such as the Financial Industry Regulatory 
Authority, Inc. (FINRA).
17
   
 
Federal Crowdfunding Regulations  
The Jumpstart Our Business Startups Act (the “JOBS Act”),
18 
establishes a regulatory structure 
for startups and small businesses to raise capital through exempt crowdfunded securities 
offerings using a funding portal.
19
 Title III of the JOBS Act created a new registration exemption 
from federal securities law to permit the issuance, offer, and sale of up to $1 million of 
crowdfunding securities per year initially, subject to specified requirements for issuers and 
intermediaries, and is not limited to accredited investors. However, national or interstate equity 
crowdfunding under Title III was not permitted until the SEC implemented Title III by final rule, 
which was not completed until November 16, 2015.
20
 In response to the delay, a number of 
states, including Florida, enacted intrastate crowdfunding exemptions, which combine some 
elements of Title III of JOBS with s. 3(a)(11) of the Securities Act of 1933. 
 
The final rule, Regulation Crowdfunding,
21
 implements the interstate crowdfunding provisions of 
the JOBS Act. The regulations permit individuals to invest in securities-based crowdfunding 
transactions subject to certain thresholds, limits the amount of money an issuer can raise under 
the crowdfunding exemption at $5 million, requires issuers to disclose certain information about 
their offers, and creates a regulatory framework for the intermediaries that facilitate the 
crowdfunding transactions. Transactions must be conducted through an intermediary that is 
registered as either a broker-dealer or a “funding portal.”
22
 The rules require intermediaries to: 
 Provide investors with educational materials; 
 Take measures to reduce the risk of fraud; 
 Make available information about the issuer and the offering; 
 Provide communication channels to permit discussions about offerings on the platform; and 
 Facilitate the offer and sale of crowdfunded securities.
23
 
 
                                                
14
 Public Law 73-291, as amended through P.L. 117-328, enacted December 29, 2022. 
15
 Section 15, Securities and Exchange Act of 1934. 
16
 Securities and Exchange Commission, “What We Do,” at SEC.gov | What We Do (last visited Nov. 15, 2023). 
17
 National securities exchanges (e.g., the New York Stock Exchange) and clearing and settlement systems may register as 
SROs with the SEC or CFTC, making them subject to SEC or CFTC oversight. A list of self-regulatory organizations (SROs) 
registered with the SEC can be found at SEC.gov | Self-Regulatory Organization Rulemaking (last visited Nov. 15, 2023). 
18
 Pub. L. 112-106, 126 Stat. 306 (2012). 
19
 Title III of the JOBS Act (“Title III”) added new Securities Act Section 4(a)(6),
 
which provides an exemption from the 
registration requirements of Securities Act Section 5. 15 U.S.C. 77e. 
20
 80 FR 71387. 
21
 17 CFR Part 200. 
22
 17 CFR Part 227. 
23
 Id.  BILL: CS/SB 532   	Page 6 
 
In addition, Regulation Crowdfunding limits the amount a non-accredited, individual investor is 
allowed to invest in Regulation Crowdfunding offerings over the course of a 12-month period 
contingent upon the investor’s net worth and annual income.
24
 There are no investment limitation 
for accredited investors.
25
 
 
Florida Regulation of Securities 
The federal securities acts expressly allow for concurrent state regulation under blue sky laws,
26
 
which are designed to protect investors against fraudulent sales practices and activities. Most 
state laws typically require companies making offerings of securities to register their offerings 
before they can be sold in a particular state, unless a specific state exemption is available. The 
laws also license brokerage firms, their brokers, and investment adviser representatives.
27
 
 
The Financial Services Commission is composed of the Governor, the Attorney General, the 
Chief Financial Officer, and the Commissioner of Agriculture.
28
 The commission members serve 
as agency head for purposes of rulemaking.
29
 The Office of Financial Regulation (OFR) and the 
Office of Insurance Regulation are units under the commission, and each office is headed by a 
commissioner appointed by the commission.
30
  
 
The scope of the OFR’s jurisdiction includes the regulation and registration of the offer and sale 
of securities in, to, or from Florida by firms, branch offices, and individuals associated with these 
firms in accordance with the ch. 517, F.S.
31
 The Division of Securities within the OFR is 
responsible for administering the Securities and Investor Protection Act (act). The act prohibits 
dealers, associated persons, and issuers from offering or selling securities in this state unless 
registered with the OFR or specifically exempted.
32
 Additionally, all securities in Florida must 
be registered with the OFR unless they meet one of the exemptions in s. 517.051 or s. 517.061, 
F.S., or are federally covered (i.e., under the exclusive jurisdiction of the SEC). As of September 
30, 2023, the Division had total registrants in the following categories: 
 Dealers: 2,427 
 Investment Advisers: 8,359 
 Branches: 11,702; and 
                                                
24
 See 17 C.F.R. s. 227.100(a)(2).  
25
  Accredited investors may, under SEC rules, participate in investment opportunities that are generally not available to non-
accredited investors, including certain investments in private companies and offerings by certain hedge funds, private equity 
funds, and venture capital funds. Further, the rules allow investors with reliable alternative indicators of financial 
sophistication to participate in such investment opportunities, while maintaining the safeguards necessary for investor 
protection. The definition of the term, “accredited investor,” is found at 17 C.F.R. s. 230.501. 
26
 The term “blue sky” derives from the characterization of baseless and broad speculative investment schemes, which such 
laws targeted. Cornell Law School, Blue Sky Laws 
https://www.law.cornell.edu/wex/blue_sky_law#:~:text=In%20the%20early%201900s%2C%20decades,schemes%20which
%20such%20laws%20targeted. (last visited Sep. 18, 2023). 
27
 U.S. Securities and Exchange Commission, Blue Sky Laws, http://www.sec.gov/answers/bluesky.htm  (last visited Mar. 1, 
2023). 
28
 Section 20.121(3), F.S. 
29
 Section 20.121(3)(a), F.S. 
30
 Section 20.121(3)(a)2., F.S. 
31
 Pursuant to s. 20.121(3), F.S. The jurisdiction of the OFR also includes state-chartered financial institutions and finance 
companies.  
32
 Section 517.12, F.S.  BILL: CS/SB 532   	Page 7 
 
 Associated Persons: 378,435
33
 
 
Intrastate Crowdfunding 
As noted earlier, in response to the delay in the adoption of federal rules implementing the JOBS 
Act, a number of states, including Florida, enacted intrastate crowdfunding exemption, which 
exempts issuers from federal registration if the issuer, purchaser, and securities offering are all 
contained within the same state, and meet other requirements. During the 2015 Session, the 
Florida Legislature enacted an intrastate crowdfunding exemption.
34
 The issuer, intermediary, 
investor, and transaction must comply with the federal intrastate exemption requirements. The 
law
35
 exempts an issuer and the securities offering of up to $1 million for a 12-month period, 
requires registration for the intermediary; and mirrors the federal investment limitations for 
investors at the time. The law requires issuer notice-filings and intermediary registrations with 
the OFR, initial and periodic disclosures to investors, an escrow agreement for investor funds, a 
right of rescission, and financial reporting to investors and to the OFR. 
 
Chapter 517 Task Force of The Florida Bar Business Law Section 
In 2022, the Executive Council of the Business Law Section of The Florida Bar created a Task 
Force to consider amendments to Chapter 517, F.S. In late 2023, the Task Force released its 
report in coordination with the OFR, which included recommendations and analysis of proposed 
changes.
36
  The impetus for the reform is to improve the ability of small and developing 
businesses in Florida to raise capital, while at the same time both assuring and improving 
investor protection and enforcement measures to guard against abuse. Florida’s securities statute 
has not been materially amended for many years. As a result, a number of measures taken both 
federally and by many states regarding small business financing have not been incorporated into 
Florida’s law.
37
 Substantive, as well as technical and clarifying changes were recommended by 
the Task Force. 
 
Uniform Law Commission  
The Uniform Law Commission (ULC, also known as the National Conference of Commissioners 
on Uniform State Laws), established in 1892, provides states with non-partisan uniform model 
acts. In 2002, the Uniform Law Commission updated the Uniform Securities Act, which provides 
basic investor protection from securities fraud, complementing the federal Securities and 
Exchange Act, and only applies to securities not regulated by the SEC.
38
 
                                                
33
 Office of Financial Regulation, Analysis of SB 532 (Oct. 1, 2023). On file with Senate Banking and Insurance Committee 
Staff. 
34
 Ch. 2015, Laws of Fla. 
35
 Section 517.0611, F.S. 
36
 Report of the Chapter 517 Task Force of the Business Law Section of The Florida Bar, Recommendations and Analysis of 
Proposed Amendments to the Florida Securities and Investor Protection Act (Nov. 2023). On file with Florida Senate 
Committee on Banking and Insurance Staff. 
37
 Id. 
38
 2002-Uniform-Securities-Act.pdf (nasaa.org) last visited Dec. 23, 2023.  BILL: CS/SB 532   	Page 8 
 
III. Effect of Proposed Changes: 
Section 1. Amends s. 517.021, F.S., to create the following definitions: 
 “Angel investor group” means a group of accredited investors who hold regular meetings and 
have defined processes and procedures for making investment decisions, individually or 
among the membership of the group, and who are not associated persons, affiliates, or agents 
of a dealer or investment adviser. 
 “Business entity” means any corporation, partnership, limited partnership, limited liability 
company, proprietorship, firm, enterprise, franchise, association, self-employed individual, or 
trust, which may or may not be fictitiously named, doing business in this state. 
  
The definition of “boiler room,” is revised to reflect technological innovations in 
communications. The definition of the term, “boiler room” is amended to mean an enterprise in 
which two or more persons in a common scheme or enterprise solicit potential investors through 
telephone calls, e-mail, text messages, social media, chat rooms, or other electronic means.  
 
The section also revises the definition of investment adviser for purposes of registration 
requirements. An investment advisor, is exempt from registration requirements if the person, 
during the preceding 12 months, has fewer than six clients instead of no more than 15 clients 
who are residents of this state. The term, “client,” has the same meaning as provided in 17 C.F.R. 
s. 275.222-2. According to the Task Force report, Florida is one of three states (including 
California and North Carolina) that have a 15 or less client exemption. Five states (Georgia, New 
Jersey, New York, Pennsylvania and Tennessee) have a no more than six client exemption, and 
all other states require registration if an adviser has a place of business in their state regardless of 
how many clients the adviser has. 
 
An exemption from the investment advisor registration is also provided for specified 
governmental entities and others, which is consistent with an exemption provided in section 
202(b) of the Investment Advisers Act of 1940. Registration requirements do not apply to the 
U.S. government, state governments and their political subdivisions, and their agencies or 
instrumentalities, including their officers, agents, or employees acting in their official capacities. 
 
Exempt Securities 
Section 2. Amends s. 517.051, F.S., which provides exemptions based on the nature of the 
securities. The exemption relating to United States, state and local government securities, is 
revised to exclude certain industrial revenue bonds and commercial development bonds. This 
change is made based on the increased risk to investors holding such bonds, which are reliant 
upon revenue streams for their support, unless the bonds are guaranteed by a publicly traded 
entity described in s. 18(b)(1) of the Securities Act of 1933. 
 
The exemption related to a security issued by a depository institution, current subsection (3), is 
revised to incorporate provisions found in s. 201(3)(B) of the Uniform Securities Act to provide 
greater clarity and specificity. The section limits the list of financial institutions to the following:  
 An international bank of which the United States is a member; 
 A bank organized under the laws of the United States; 
 A member bank of the Federal Reserve System; or  BILL: CS/SB 532   	Page 9 
 
 A depository institution when a substantial portion of the business consists or will consist of 
receiving deposits or share accounts that are insured to the maximum amount authorized by 
statute by the federal Deposit Insurance Corporation or the National Credit Union Share 
Insurance Fund.  
 
The current registration exemption provided in s. 517.051(8), F.S., for notes of at least $25,000 
that have a maturity period not exceeding nine months and are sold to non-accredited investors is 
eliminated. According to the Task Force, this exemption has been the subject of abusive efforts 
by persons attempting to evade registration requirements. There is no analogy to this exemption 
in the Uniform Securities Act.  
 
Section 517.051, F.S., is amended to provide an exemption for all not-for-profit cooperatives. 
Currently, ss. 517.051(7) and 517.061, F.S., provide a registration exemption for agricultural and 
residential cooperatives, respectively. The residential cooperative exemption is currently a 
transaction exemption and is moved to new s. 517.051(8), F.S. Subsection (9) is created to 
provide a registration exemption for all other forms of not-for-profit cooperatives, which is 
consistent with the Uniform Securities Act. This provision exempts a member's or owner's 
interest in, or a retention certificate or like security given in lieu of a cash patronage dividend 
issued by, a not-for-profit membership entity operated either as a cooperative under the 
cooperative laws of a state or in accordance with the cooperative provisions of subchapter T of 
chapter 1 of subtitle A of the United States Internal Revenue Code, as amended, but not a 
member's or owner's interest, retention certificate, or like security sold or transferred to a person 
other than:  
 A bona fide member of the not-for-profit membership entity; or 
 A person who becomes a bona fide member of the not-for-profit membership entity at the 
time of or in connection with the sale or transfer.  
 
Technical, clarifying changes are made to the section.  
 
Exempt Securities Transactions 
Sections 3. Amends s. 517.061, F.S., to reorganize and amend the section by grouping similar 
types of transactions together. Except as otherwise provided in subsection (11), the exemptions 
from the registration requirements of s. 517.07, F.S., are self-executing and do not require any 
filing with the OFR. However, such transactions are subject to the anti-fraud provisions of s. 
517.301, F.S. 
 
Section 517.061(1), F.S., relating to judicial approval of a securities transaction, is amended in 
paragraph (a) to expand the exemption to include sales effected through assignments for the 
benefit of creditors. New paragraph (b) exempts a transaction involving a security issued in 
exchange, except in a case under Title 11 of the United States Code, for one or more bona fide 
outstanding securities, or property interests, or partly in such exchange and partly for cash, if the 
terms and conditions are approved by certain governmental entities after a hearing upon the 
fairness of such terms and conditions. The Task Force adopted the language of the federal 
analog, s. 3(a)(10) of the Securities Act of 1933. 
  BILL: CS/SB 532   	Page 10 
 
The current exemption provided in subsection (3), relating to a stock dividend or equivalent 
equity distribution, is amended to prohibit the giving of value by stockholders or other equity 
holders for the dividend or equivalent equity distribution other than the surrender of a right to a 
cash or property dividend in the event that each stockholder or other equity holder may elect to 
take the dividend or equivalent equity distribution in cash, property, or stock. The subsection is 
modeled after the Uniform Securities Act. 
 
The bill expands the current exemption in subsection (4), related to a transaction involving the 
distribution of securities among an issuer’s own security holders, to include persons that at the 
date of the transaction are holders of options and all types of warrants. The provision is modeled 
after the Uniform Securities Act. 
 
Subsection (8) expands the current exemption relating to employer-sponsored stock option plans 
to include any securities, plan interests, and guarantees issued under a compensatory benefit plan 
or compensation contract, and requires that the employee benefit plan be contained in a record 
established by the issuer, its parents, its majority-owned subsidiaries, or the majority-owned 
subsidiaries of the issuer’s parent for the participation of their employees.  
 
Subsection (9) revises a current exemption, relating to the offer or sale of securities to a financial 
institution, to eliminate the limitation that the offers or sales of securities may not be for the 
direct or indirect promotion of any scheme or enterprise with the intent of violating or evading 
ch. 517, F.S. A general provision addresses this issue in s. 517.0613, F.S. The subsection 
eliminates the requirement that the FSC define “institutional investor.” The term, “qualified 
institutional buyers,” is defined in s. 517.021, F.S. 
 
The limited offering exemption in subsection (10)(a) is amended to remove the provision 
prohibiting the payment of a commission or compensation for the sale of the securities in certain 
circumstances under the exemption relating to the offer or sale, by or on behalf of an issuer, of its 
own securities, where there are no more than 35 purchasers since the statute already precludes 
compensation to nondealers. The 3-day voidability provision has been revised to limit it to three 
days from the date of purchase. Newly created exemptions proposed in ss. 517.0611, F.S., and 
517.0612, F.S., will allow general advertising and solicitation, subject to enforcement provisions 
for material misstatements or omissions. The section adds certain additional purchasers to the list 
of excluded purchasers for purposes of the 35 purchaser limit. The added provisions have been 
taken from the analogous SEC Rule 501 exclusions for counting purchasers. 
  
The limited offering exemption is the current statute’s primary registration exemption for capital-
raising purposes. It was modeled after the SEC Rule 505 exemption which no longer exists. The 
exemption is principally used by issuers that limit their offers and sales to Florida residents. It 
has no monetary limitation on the issuer or any investor but is limited to no more than 35 non-
accredited investors.  A principal problem with this exemption has been the prohibition against 
any general advertising or solicitation, which substantially impairs the ability of smaller, 
developing companies to attract investors.  
 
  BILL: CS/SB 532   	Page 11 
 
Subsection (11) substantially codifies the North American Securities Administrators 
Association
39
 (NASAA) model accredited investor exemption. Sales of securities may only be 
made to persons who are, or the issuer reasonably believes are, accredited investors. The 
exemption is not available to an issuer that:  
 Has an undefined business operation;  
 Lacks a business plan;  
 Lacks a stated investment goal for the funds being raised; or  
 Plans to engage in a merger or acquisition with an unspecified business entity.  
 
The model provides that a general announcement of the proposed offering, made by any means, 
may include only specified information. The issuer must file with the OFR a notice of 
transaction, a consent to service of process, and a copy of the general announcement within 15 
days after the first sale in this state. The FSC may adopt by rule procedures for filing documents 
by electronic means. Dissemination of the general announcement of the proposed offering to 
persons who are not accredited investors does not disqualify the issuer from claiming the 
exemption under this rule.  
 
Subsection (15) creates an exemption for non-issuer transactions with a federal covered adviser 
managing investments in excess of $100 million acting in the exercise of discretionary authority 
in a signed record for the accounts of others. This exemption is modeled after the Uniform 
Securities Act.  
 
Subsection (16) is amended to allow the FSC to recognize by rule clearinghouses able to clear 
option transactions for purposes of this subsection. The subsection is also amended to require 
that the underlying security is purchased or sold on a recognized security exchange registered 
under the Securities Exchange Act of 1934 and to eliminate the possibility that the underlying 
security instead be quoted on the National Association of Securities Dealers Automated 
Quotation System. 
 
The exemption for nonissuer transactions of securities outstanding at least 90 days in subsection 
(18) is revised to change the conditions for eligibility. Current law requires all conditions for this 
exemption must be satisfied. The section is revised to retain the mandatory conditions of (a)-(c), 
along with either one of (d) and (e). 
  
Subsection (20) creates an exemption for buying and selling of securities of foreign companies 
through foreign brokers. Non-issuer transactions in an outstanding security by or through a 
dealer registered or exempt from registration are exempt if:  
 The issuer is a reporting issuer in Canada or in a foreign jurisdiction designated by 
Commission rule and the issuer has been subject to continuous reporting requirements for not 
less than 180 days before the transaction; and  
                                                
39
 NASAA is a nonprofit association of securities regulators in the United States, Canada, and Mexico. About - NASAA (last 
visited December 23, 2023). In 1997, NASAA members voted to approve “Model Accredited Investor Exemption” (the AI 
Exemption). NASAA, MODEL ACCREDITED INVESTOR EXEMPTION (Apr. 27, 1997) 4-27-97.PDF (nasaa.org)(last 
visited Jan. 10, 2023). The AI exemption exempts the offer or sale of a security by an issuer from the security registration 
process in a transaction meeting certain requirements including that the sale of securities is limited to accredited investors and 
the issuer must not be subject to disqualification. The majority of states have adopted the AI exemption.  BILL: CS/SB 532   	Page 12 
 
 The security is listed on The Toronto Stock Exchange, Inc. or on a foreign jurisdiction’s 
securities exchange that has been designated by FSC rule, or is a security of the same issuer 
that is of senior or substantially equal rank to the listed security or is a warrant or right to 
purchase or subscribe to any of the foregoing.  
 
The OFR may revoke any designation of a securities exchange if the OFR finds that revocation is 
necessary or appropriate in the public interest and for the protection of investors. 
 
Florida Limited Offering Exemption 
Section 4. Amends s. 517.0611, F.S., the “Intrastate Crowdfunding Exemption.” The section is 
substantially amended and renamed the “Florida Limited Offering Exemption” in subsection (1). 
Subsection (2) is amended to provide that the registration requirements of s. 517.07, F.S., do not 
apply to transactions conducted in accordance with this section; however, such transactions are 
subject to the anti-fraud provisions of s. 517.301, F.S. Currently, the section specifies that an 
offer or sale of a security conducted in accordance with this section is an exempt transaction 
under s. 517.061, F.S., and the exemption may not be used in conjunction with any other 
exemption under ss. 517.051 or 517.061, F.S. 
 
Subsection (3) requires that the offer or sale of securities under this section be conducted in 
accordance with the requirements of the federal exemption for intrastate offerings in s. 3(a)(11) 
of the Securities Act of 1933, 15 U.S.C. s. 77c(a)(11), 17 CFR s. 230.147 or 17 CFR 230.147A, 
which is being added. In 2016, the SEC adopted Rule 147A, a new intrastate offering exemption, 
which is substantially identical to Rule 147 except that Rule 147A: 
 Allows offers to be accessible to out-of-state residents, so long as sales are only made to in-
state residents;  
 Permits a company to be incorporated or organized out-of-state, so long as the company has 
its “principal place of business” in-state and satisfies at least one “doing business” 
requirement that demonstrates the in-state nature of the company’s business; and 
 Allows issuers to engage in general solicitation and general advertising of their offerings, 
using any form of mass media, including unrestricted, publicly-available Internet websites, so 
long as sales of securities so offered are made only to residents of the state or territory in 
which the issuer has its principal place of business. 
 
Subsection (4) revises issuer requirements in the following manner: 
 The issuer must be a for-profit business entity that maintains its principal place of business 
and derives its revenues primarily from operation in this state. Under current law, the entity 
is required to be formed under the laws of the state, be registered with the Secretary of State, 
maintain its principal place of business in the state, and derive its revenues primarily from 
operations in the state. 
 An issuer must conduct transactions for an offering of $2.5 million or more through a dealer 
through a dealer or intermediary registered with the office. For an offering of less than $2.5 
million, the issuer may, use such a dealer or intermediary. Under current law, an issuer must 
use a registered dealer or intermediary regardless of the amount of the offering.  
 The issuer may not be subject to a disqualification established by the FSC or OFR or a 
disqualification described in s. 517.1611, F.S., or newly created s. 517.0616, F.S. Each 
director, officer, manager, managing member, or general partner, or person occupying a  BILL: CS/SB 532   	Page 13 
 
similar status or performing a similar function, or person holding more than 20 percent of the 
equity interest of the issuer, is subject to this requirement. Section 517.0616, F.S., references 
disqualifications under 17 C.F.R. s. 230.506(d).  
 The issuer must deposit all funds received from investors in an account in a federally insured 
financial institution authorized to do business in this state. Further, an issuer must maintain 
all such funds in the account until the target offering amount is reached or the offering 
amount has not been reached within the period specified. Currently, an issuer must execute 
an escrow agreement with a federally insured financial institution authorized to do business 
in the state for the deposit of investor funds, and ensure that all offering proceeds are 
provided to the issuer only when the aggregate capital raised from all investors is equal to or 
greater than the target offering amount. 
 
Subsection (5) requires an issuer to file a notice of the offering with the OFR together with a 
nonrefundable filing fee. The disclosures required to be included in the notice form are revised in 
the following manner:  
 Eliminates the attestation requirement. Currently, the notice must contain an attestation under 
oath that the issuer, its predecessors, affiliated issuers, directors, officers, and control 
persons, or any other person occupying a similar status or performing a similar function, are 
not currently and have not been within the past 10 years the subject of regulatory or criminal 
actions involving fraud or deceit.  
 Must state the target offering amount as well as the date, not to exceed 365 days, by which 
the target amount must be reached in order to avoid termination of the offering. 
 
Subsection (6) requires an issuer to amend the notice form within 10 business days instead of 30 
days after any material information becomes inaccurate.  
 
Subsection (7) authorizes an issuer to engage in general advertising and general solicitation of 
the offer to prospective investors. Any oral or written statements in advertising or solicitation of 
the offer are subject to enforcement under ch. 517, F.S. Any general advertising or other general 
announcement must state that the offering is limited and open only to residents of this state. 
 
Subsection (8) is amended to require an issuer to provide a disclosure statement to the dealer or 
intermediary, as applicable: to the OFR at the time that the notice is filed and to each prospective 
investor at least three days before the investor’s commitment to purchase or payment of any 
consideration, a disclosure statement containing material information about the issuer and the 
offering. The bill provides the following changes: 
o The statement must also include the email address of the issuer. Currently, the name, legal 
status, physical address, and website address of the issuer are required. 
o The disclosure of the names of the managers, managing members, and general partners are 
added. Currently, the names of the directors, officers, and any person occupying a similar 
status or performing a similar function, and the name of each person holding more than 20 
percent of the issuer’s equity interests are required to be disclosed. 
o The regular updates of the issuer regarding the progress in meeting the target offering amount 
is eliminated. 
o The methodology for determining the price is eliminated and the requirement that prior to the 
sale, the investor must receive in writing the final price and all required disclosures and have 
an opportunity to rescind the commitment to purchase the securities.  BILL: CS/SB 532   	Page 14 
 
o A description of the ownership and capital structure of the issuer is revised to eliminate the 
disclosure of the name and ownership level of each existing shareholder who owns more than 
20 percent of any class of the securities of the issuer; how the securities being offered are 
being valued, and examples of methods of how such securities may be valued by the issuer in 
the future; and the risks to purchasers of the securities relating to minority ownership in the 
issuer, the risks associated with corporate action, including additional issuances of shares, a 
sale of the issuer or of assets of the issuer, or transactions with related parties. 
o The bill adds a statement that the security being offered is not registered under federal or 
state securities laws and that the securities are subject to the limitations on resale contained in 
SEC Rule 147 or Rule 147A. 
o The bill adds a disclosure regarding any issuer plans to offer additional securities in the 
future. 
o The bill adds a disclosure about the risks to purchasers of the securities relating to the 
minority ownership in the issuer.   
o A description of the financial condition of the issuer. 
o The bill provides that, for offering amounts of $500,000 or less, the inclusion of 
financial statements of the issuer are optional. Under current law, certified financial 
statements and the most recent tax return filed by the issuer are longer required. 
Further, for offerings that within the preceding 12-month period, have target offering 
amounts of  $100,000 or less, the description must include the most recent income tax 
return filed by the issuer, if any, and a financial statement that must be certified by the 
principal executive officer of the issuer as true and complete in all material respects. 
o The bill provides that for offering amounts of more than $500,000 but not more than 
$2.5 million, the description must include financial statements reviewed by a certified 
public accountant. Currently, for offerings that within the preceding 12-month period, 
have target offering amounts of $100,001 - $500,000, the description must include 
financial statements prepared in accordance with generally accepted accounting 
principles and reviewed by a certified public accountant who is independent of the 
issuer, using professional standards and procedures for such review or standards and 
procedures established by the office, by rule, for such purpose. 
o The bill provides that for offerings of more than $2.5 million, the description must 
include audited financial statements. Under current law, for offerings that within the 
preceding 12-month period, have target offering amounts of more than $500,000, the 
description must include audited financial statements prepared in accordance with 
generally accepted accounting principles by a certified public accountant who is 
independent of the issuer, and other requirements as the FSC may establish by rule. 
 
The bill provides that the following additional statement must appear on the front page of the 
disclosure statement: 
“Neither the Securities and Exchange Commission nor any state securities commission 
has approved or disapproved these securities or determined if this disclosure statement is 
truthful or complete. Any representation to the contrary is a criminal offense.” 
 
The foregoing statement is added to the following statement which must be provided under 
current law. Both the previous and the following statement must appear in boldface, conspicuous 
type on the front page of the disclosure statement:  BILL: CS/SB 532   	Page 15 
 
“These securities are offered under, and will be sold in reliance upon, an exemption from 
the registration requirements of federal and Florida securities laws. Consequently, neither 
the Federal Government nor the State of Florida has reviewed the accuracy or 
completeness of any offering materials. In making an investment decision, investors must 
rely on their own examination of the issuer and the terms of the offering, including the 
merits and risks involved. These securities are subject to restrictions on transferability 
and resale and may not be transferred or resold except as specifically authorized by 
applicable federal and state securities laws. Investing in these securities involves a 
speculative risk, and investors should be able to bear the loss of their entire investment.” 
 
Subsection (9) is amended to increase the cap for an offering from $1 to $5 million. Offers or 
sales to a person owning 20 percent or more of the equity of any class or classes of securities or 
to an officer, director, partner, manager, managing member, general partner or trustee, or a 
person occupying a similar status, do not count toward this limitation. 
 
Subsection (10) is revised to provide that sales of securities to non-accredited investors in a 12-
month period may not exceed $10,000. Currently, this calculation is based on the income and net 
worth of a non-accredited investor. 
 
Current subsection (11) is eliminated, which requires the issuer to file with the OFR and provide 
to investors free of charge an annual report of the results of operations and financial statements 
of the issuer within 45 days after the end of its fiscal year, until no securities under this offering 
are outstanding. The annual reports must meet specified requirements. 
 
Subsection (11), authorizes the OFR to summarily suspend a notice filing if the payment for the 
filing is dishonored by the financial institution upon which the funds are drawn or if the issuer 
made a material false statement in the issuer’s notice-filing. A material false statement made in 
the issuer’s notice-filing results in a final order by the OFR revoking the notice-filing, issuing a 
fine and permanent bar to the issuer and all owners, officers, directors, and control persons, or 
any person occupying a similar status or performing a similar function of the issuer. The 
subsection provides technical conforming changes. 
 
Subsection (12), relating to the duties of an intermediary, is revised, to provide that if the issuer 
employs the services of an intermediary, the intermediary must take measures, as established by 
FSC rule, to reduce the risk of fraud with respect to the offering. Under current law, the 
intermediary must, with respect to transactions, verify that the issuer is in compliance with the 
requirements of this section and, if necessary, deny an issuer access to its platform if the 
intermediary believes it is unable to adequately assess the risk of fraud of the issuer or its 
potential offering. 
 
The subsection revises the provision relating to the information an intermediary must obtain 
from investors to document residency or status as an accredited investor. The bill requires an 
intermediary to obtain from each prospective investor a zip code or residence address, a copy of 
a driver license, and any other proof of residency in order for the issuer or intermediary to 
reasonably believe that the potential investor is a resident of this state. The FSC may adopt rules 
authorizing additional forms of identification and prescribing the process for verifying any 
identification presented by the prospective investor. The intermediary must obtain information  BILL: CS/SB 532   	Page 16 
 
sufficient for the issuer or intermediary to reasonably believe that a particular prospective 
investor is an accredited investor. 
 
The subsection eliminates the requirement that an intermediary must obtain an affidavit from 
each investor regarding their income. Currently, an intermediary must obtain an affidavit from 
each investor stating that the investment being made by the investor is consistent with the 
income requirements. The bill provides conforming changes to eliminate requirements relating to 
escrow funds and escrow agreements.  
 
The subsection eliminates the following duties of an intermediary: 
 Require each investor to certify in writing that the investor understands the risks of investing, 
the terms of the offering, and the limitations on resale. 
 Require each investor to answer questions demonstrating an understanding of the level of 
risk generally applicable to investments in startups, emerging businesses, and small issuers, 
and an understanding of the risk of illiquidity. 
 Implement written policies and procedures that are reasonably designed to achieve 
compliance with federal and state securities laws; the anti-money laundering requirements 
applicable to registered brokers; and privacy requirements. 
 Solicit purchases, sales, or offers to buy securities offered or displayed on its website. 
 
Subsection (14) provides that if the issuer does not employ a dealer or an intermediary for an 
offering created pursuant to this section, the issuer may not:  
 Compensate employees, agents, or other persons for the solicitation of, or based on the sale 
of, securities offered or displayed on its website. 
 Hold, manage, possess, or otherwise handle investor funds or securities. 
 Compensate promoters, finders, or lead generators for providing personal identifying 
information of any potential investor. 
 Engage in any other activities set forth by commission rule. 
 
Subsection (15) provides that any sale made pursuant to the exemption created under this section 
is voidable by the purchaser within 3 days after the first tender of consideration is made by such 
purchaser to the issuer by notifying the issuer that the purchaser expressly voids the purchase. 
The purchaser’s notice to the issuer must be sent by e-mail to the issuer’s e-mail address set forth 
in the disclosure statement that is provided to the purchaser or purchaser’s representative or by 
certified mail or overnight delivery service with proof of delivery to the mailing address set forth 
in the disclosure statement. Under current law, an investors may cancel a commitment to invest 
within 3 business days before the offering deadline, as stated in the disclosure statement, and 
issue refunds to all investors if the target offering amount is not reached by the offering deadline. 
 
Florida Invest Local Exemption 
 
Section 5. Creates s. 517.0612, F.S., the “Florida Invest Local Exemption,” a micro-offering 
exemption. The section provides that the registration provisions of s. 517.07, F.S., do not apply 
to a securities transaction conducted in accordance with this section. However, such transactions 
are subject to the anti-fraud provisions of s. 517.301, F.S. The bill:  BILL: CS/SB 532   	Page 17 
 
 Requires that the offer or sale of securities under this section must meet the requirements of 
the federal exemption for intrastate offerings in s. 3(a)(11) of the Securities Act of 1933, 
Securities and Exchange Commission Rule 147, or Securities and Exchange Commission 
Rule 147A. 
 Requires the issuer to be a for-profit business entity registered with the Department of State 
with its principal place of business in this state. The issuer cannot be, either before or as a 
result of the offering: 
o An investment company as defined in the Investment Company Act of 1940, as 
amended; 
o Subject to the reporting requirements of the Securities and Exchange Act of 1934, as 
amended; 
o An organization with an undefined business operation, a company that lacks a 
business plan, a company that lacks a stated investment goal for the funds being 
raised, or a company that plans to engage in a merger or acquisition with an 
unspecified business entity, or  
o Subject to a disqualification pursuant to s. 517.0616, F.S.  
 Provides that the sum of all cash and other consideration received for all sales of the security 
in reliance upon this exemption may not exceed $500,000, less the aggregate amount 
received for all sales of securities by the issuer within the 12 months before the first offer or 
sale made in reliance on this exemption. 
 Provides that the issuer may not accept more than $10,000 from any single purchaser unless: 
o The issuer reasonably believes that the purchaser is an accredited investor; 
o The purchaser is an officer, director, partner, or trustee of an individual occupying a 
similar status or performing similar functions of the issuer; or the purchaser is an 
owner of 10 percent or more of the issuer’s outstanding equity. Any relative, spouse, 
child or family relative who has the same primary residence of the purchaser shall 
collectively be treated as a single purchaser or any business entity of which the 
purchaser and any person related to the purchaser collectively owns more than 50 
percent of the equity interest must be treated collectively as a single purchaser. 
 Authorizes an issuer to engage in general advertising and general solicitation of the offering. 
Any general advertising or other general announcement must state that the offer is limited 
and open only to residents of the state. Written or oral statements made in the advertising or 
solicitation of the offer are subject to the enforcement provisions of this chapter. 
 Requires a purchaser to receive, at least 3 business days prior to any binding commitment to 
purchase or consideration paid, a disclosure document which sets forth material information 
of the issuer, including but not limited to the following: 
o Issuer’s name, form of entity and contact information. 
o The name and contact information of each director, officer or other manager of the issuer. 
o A description of the issuer’s business. 
o A description of the security being offered and the total amount of the offering. 
o The intended use of proceeds from the sale of the securities. 
o The target amount of the offering. 
o A statement that if the target amount is not obtained in cash or the value of other tangible 
consideration received within a date that is no more than 180 days after the 
commencement of the offering, the offering will be terminated, and any funds or other 
consideration received from purchasers shall be promptly returned.  BILL: CS/SB 532   	Page 18 
 
o A statement that the security being offered is not registered under federal or state 
securities laws and that the securities are subject to the limitation on resale contained in 
17 C.F.R. s. 230.147 or 17 C.F.R. s. 230.147A. 
o The names and addresses of all persons who will be involved in the offer and sale of 
securities on behalf of the issuer. 
o The depository institution into which investor funds will be deposited. 
o A statement in boldface type that “Neither the Securities and Exchange Commission nor 
any state securities commission has approved or disapproved these securities or 
determined if this prospectus is truthful or complete. Any representation to the contrary 
is a criminal offense.” 
 Requires that all funds received from investors must be deposited into a depository institution 
authorized to do business in Florida. The issuer may not withdraw any amount of the offering 
proceeds unless and until the target amount has been received. 
 Requires the issuer to file a notice of the offering with the OFR, in writing or in electronic 
form, in a format prescribed by FSC rule, no less than 5 business days before the offering 
commences, along with the disclosure document. The issuer must, within 3 business days, 
file an amended notice if there are any material changes to the information previously 
submitted.  
 Provides that an individual, entity, or entity employee who acts as an agent for the issuer in 
the offer or sale of securities under this exemption and is not registered as a dealer or 
intermediary under this chapter may not: 
o Receive compensation based upon the solicitation of purchases, sales, or offers to 
purchase the securities, or 
o Take custody of investor funds or securities. 
 Provides that any sale, made pursuant to this exemption, is voidable by the purchaser, within 
3 days after the first tender of consideration is made by such purchaser to the issuer, by 
notifying the issuer that the purchaser expressly voids the purchase by sending an email to 
the issuer’s email address set forth in the disclosure document provided to purchasers or 
purchaser’s representatives or by certified mail or overnight delivery service with proof of 
delivery to the mailing address set forth in such disclosure document. 
 
Section 6. Creates s. 517.0613, F.S., relating to the failure to comply with a securities 
registration exemption. This provision is similar to SEC Rule 500 in Regulation D. The section 
clarifies that an issuer who fails to comply with any exemption from securities registration is not 
precluded from claiming the availability of any other applicable state or federal exemption.  
 
Further, the section provides that ss. 517.061, 517.0611, and 517.0612, F.S., are not available to 
an issuer for any transaction or chain of transactions that, although in technical compliance with 
the applicable provisions, is part of a plan or scheme to evade the registration provision of s. 
517.07, F.S., and registration under s. 517.07, F.S., is required in connection with such 
transaction.  
 
Section 7. Creates s. 517.0614, F.S., a stand-alone integration provision, which is consistent with 
17 CFR s. 230.152, the SEC’s integration rule, and is applicable to all issuer capital raising 
exemptions.   
  BILL: CS/SB 532   	Page 19 
 
SEC Rule 152 significantly reduces the threat to companies, especially smaller ones that have 
continuing and sporadic needs for capital, that multiple offerings will be integrated as one, with 
the result that otherwise distinct valid exempt offerings will be deemed in violation of the 
registration provisions.  
 
SEC Rule 152 provides a framework for determining whether multiple securities transactions 
should be considered part of the same offering and contains four non-exclusive safe harbors from 
integration. Offerings may not be integrated if, based on particular facts and circumstances, the 
issuer can establish either that each offering complies with the registration requirements of ch. 
517, F.S., or that an exemption from registration is available for the particular offering, provided 
that any transaction or series of transactions that, although in technical compliance with ch. 517, 
F.S., is part of a plan or scheme to evade the registration requirements of ch. 517, F.S., will not 
have the effect of avoiding integration.  
 
For an exempt offering prohibiting general solicitation, the issuer must have a reasonable belief, 
based on the facts and circumstances, with respect to each purchaser in the exempt offering, that 
the issuer or any person acting on the issuer’s behalf:  
 Did not solicit such purchaser through the use of general solicitation; or  
 Established a substantive relationship with such purchaser before the commencement of 
the exempt offering, provided that a purchaser previously solicited by general solicitation 
is not deemed to have been solicited through the use of general solicitation in the current 
offering if, during the 45 calendar days following such previous general solicitation:  
o No offer or sale of the same or similar class of securities has been made by or on 
behalf of the issuer, including to such purchaser; and 
o The issuer or any person acting on the issuer's behalf has not solicited such 
purchaser through the use of general solicitation for any other security  
 
 
Communication and Solicitation of Potential Investors 
Section 8. Creates s. 517.0615, F.S., relating to solicitation of interest, to authorize an issuer to 
solicit potential investors under limited circumstances consistent with federal rules. Subsection 
(1) adopts provisions consistent with the federal “Demo Day Presentations” rule.
40
  The 
subsection provides that pre-offering communications made by an issuer in connection with a 
demo day presentation are not deemed to constitute general solicitation if the communications 
are made in connection with such an event or presentation being sponsored by a college, 
university, or other institution of higher education, a state or local government or instrumentality 
of a state or local government, a nonprofit organization, or an angel investor group, incubator, or 
accelerator; provided that advertising for the event does not reference any specific offering of 
securities by the issuer; and the sponsor of the meeting or seminar does not: 
 Make investment recommendations or provide investment advice to attendees of the event. 
 Engage in any investment negotiations between the issuer and investors attending the event. 
 Charge attendees of the event any fees, other than reasonable administrative fees.  
 Receive any compensation for making introductions between event attendees and issuers, or 
for investment negotiations between the parties.  
                                                
40
 17 C.F.R. s. 230.148.  BILL: CS/SB 532   	Page 20 
 
 Receive any compensation with respect to the event that would require registration or notice 
filing under the securities laws. The sponsorship of or participation in the seminar or meeting 
does not by itself require registration or notice-filing under ch. 517, F.S.  
 
Information regarding an offering of securities by the issuer which is communicated or 
distributed by or on behalf of the issuer in connection with a seminar or meeting is limited to a 
notification that the issuer is in the process of offering or planning to offer securities, the type 
and amount of securities being offered, the intended use of the proceeds of the offering, and the 
unsubscribed amount in an offering. If the event allows attendees to participate virtually, rather 
than in person, online participation in the seminar or meeting is limited to certain specified 
participants. 
 
Subsection (2) adopts provisions consistent with SEC Rule 241,
41
 which allows “testing the 
waters” by an issuer in advance of making any offering. An issuer or their representative may 
communicate orally or in writing to determine whether there is any interest in a contemplated 
offering of securities exempt from federal registration requirements. The rule provides an 
exemption only with respect to the generic solicitation of interest. This will allow issuers to 
gauge the feasibility and market interest in a securities offering prior to incurring the time and 
expense of a preparing and conducting an offering. The solicitation or acceptance of money or 
other consideration or commitment from any person is prohibited. 
 
SEC Rule 241 further requires the testing-the-waters materials to provide specified disclosures 
notifying potential investors about the limitations of the generic solicitation. The issuer’s 
communications must state the following: 
 No money or other consideration is being solicited, and if sent in response, will not be 
accepted;  
 No offer to buy the securities can be accepted and no part of the purchase price can be 
received until the issuer determines the exemption under which the offering is intended to be 
conducted and, where applicable, the filing, disclosure, or qualification requirements of such 
exemption are met; and 
 A person’s indication of interest involves no obligation or commitment of any kind. 
 
Any written communication may include a means for a person to indicate interest in a potential 
offering and an issuer may require such indication to include the person’s name, address, 
telephone number, or email address in any response form included in the written 
communication.
42
 A communication in accordance with the “testing the waters” provision is not 
subject to s. 501.059, F.S., regarding telephone solicitations.  
 
Section 9. Creates s. 517.0616, F.S., relating to issuer disqualifications, to provide that a 
registration exemption under s. 517.061(9), (10), and (11), s. 517.0611, or 517.0612, F.S., is not 
available to an issuer that would be disqualified under 17 C.F.R. s. 230.506(d) at the time the 
                                                
41
 17 CFR s. 230.241. 
42
 SEC, Facilitating Capital Formation and Expanding Investment Opportunities by Improving Access to Capital in Private 
Markets, A Small Entity Compliance Guide (Mar. 10, 2021), https://www.sec.gov/corpfin/facilitating-capital-formation-secg 
(last visited Sep. 18, 2023).  BILL: CS/SB 532   	Page 21 
 
issuer makes an offer for the sale of a security. “Bad actor” disqualifying events include, but are 
not limited to: 
 Specified relevant criminal convictions, certain court injunctions and restraining orders, and 
final orders of certain state and federal regulators; 
 Certain SEC (Securities and Exchange Commission) disciplinary orders; 
 Certain SEC cease-and-desist orders; and 
 Suspension or expulsion from membership in a self-regulatory organization (SRO), such as 
FINRA, or from association with an SRO member. 
 
Section 10. Revises s. 517.081, F.S., relating to securities registration requirements. To provide 
greater clarity, the provisions relating to the rulemaking authority of the FSC are consolidated 
and revised within the section. The section eliminates the five-year annual financial reporting 
requirements for SCOR and the prohibition against a person using the SCOR registration method 
for the resale of securities, which will allow non-control persons to resell securities through a 
Florida-based registration process. 
 
Under current law, the FSC must adopt a form for a simplified offering circular to register 
securities that are sold in offerings in which the aggregate offering price in any consecutive 12-
month period does not exceed $5 million. The simplified offering circular is synonymous with a 
Small Company Offering Registration (SCOR) under the Securities Act of 1933.
43
  To qualify 
for use of the simplified offering circular, the issuer must: 
 File an annual financial report with OFR that contains a balance sheet as of the end of the 
issuer’s fiscal year and a statement of income for such year (and if the issuer has more than 
100 security holders at the end of a fiscal year, the financial statements must be audited); and 
 File annual financial reports with OFR for each of the first 5 years following the effective 
date of the registration. 
 
Section 11. Amends s. 517.101, F.S., relating to consent to service, to expand the type of persons 
who are eligible to sign the written consent on behalf of a business entity to include directors, 
managers, managing members, general partners, trustees, or officers of the issuer. The bill also 
expands the persons who can authorize the signer to execute the written consent to include the 
issuer’s general partners and managing members. Under current law, an issuer is required, upon 
any initial application for registration under the act or upon request of OFR, to file with such 
application the irrevocable written consent to service. The written consent must be authenticated 
by the seal of said issuer (if it has a seal), and by the acknowledged signature of a member of the 
co-partnership or company, or by the acknowledged signature of any officer of the incorporated 
or unincorporated association, and such consent to service must be duly authorized by resolution 
of the board of directors, trustees, or managers of the corporation or association (and such 
resolutions must be filed as a certified copy with the written consent to service). 
 
Securities Guaranty Fund (Sections 12 and 13) 
 
Section 12. Amends s. 517.131, F.S., relating to the Securities Guaranty Fund, to revise 
eligibility requirements and provide technical changes. In subsection (1), the definition of the 
                                                
43
 SCOR was designed for use by companies seeking to raise capital through a public offering of securities exempt from 
registration with the SEC under the Securities Act of 1933 pursuant to Rule 504 of Regulation D, Rule 147, or 147A.  BILL: CS/SB 532   	Page 22 
 
term, “final judgment,” is amended to also include an arbitration award confirmed by a court of 
competent jurisdiction. The subsection is also amended to eliminate the requirement that the 
wrongdoer be a dealer, investment adviser, or associated person registered under ch. 517, F.S.  
 
Subsection (2) is amended to specify that the purpose of the Securities Guaranty Fund (Fund) is 
to provide monetary relief to victims of securities violations under this chapter who are entitled 
to monetary damages or restitution and cannot recover the full amount of such monetary 
damages or restitution from the wrongdoer.  
 
Subsection (3) is amended to require that a person meet the following conditions to be eligible 
for payment from the Fund:  
 The person holds an unsatisfied final judgment in which a wrongdoer was found to have 
violated s. 517.07, F.S., or s. 517.301, F.S.;  
 The person has applied any amounts recovered from the judgment debtor or from any other 
source to the damages awarded by the court or arbitrator; and   
 The person is a natural person who was a resident of this state, or is a business entity that was 
domiciled in this state, at the time of the violation giving rise to the claim; or is a receiver 
appointed pursuant to s. 517.191(2), F.S., by a court of competent jurisdiction for a 
wrongdoer order to pay restitution under s. 517.191(3), F.S. as a result of a violation of s. 
517.07, F.S., or s. 517.301, F.S., which has requested payment from the Fund on behalf of an 
eligible for payment.  
 
This section is amended to eliminate the current requirement that the act for which recovery is 
sought occurred on or after January 1, 1979, and to eliminate the ability of the OFR to waive 
certain requirements under this section. The section provides that changes in the bill relating to 
the Fund apply to acts for which recovery is sought occurred on or after October 1, 2024. 
Further, the requirement that a person make all reasonable searches and inquiries to ascertain 
whether the judgment debtor possesses real or personal property or other assets subject to being 
sold or applied in satisfaction of the judgment is eliminated. Under current law, for a person to 
be eligible to receive payment from the Fund, the following requirements must be met: 
 The act for which recovery is sought occurred on or after January 1, 1979;  
 The person has received final judgement from a court that a violation of ss. 517.07 or 
517.301, F.S., occurred for which monetary damages are awarded;  
 The person has made all reasonable searches and inquiries to ascertain whether the violator 
possesses assets that can be sold in satisfaction of the damages awarded, and in such search 
has discovered no or insufficient assets; and 
 The person has applied any amounts recovered from the violator, or from any other source, to 
the damages awarded by the court. 
 
Subsection (4) is created to prohibit a person from being eligible for payment from the Fund if 
the person has:  
 Participated or assisted in a violation of ch. 517, F.S.;  
 Attempted to commit or committed a violation of ch. 517, F.S.; or  
 Profited from a violation of ch. 517, F.S.  
  BILL: CS/SB 532   	Page 23 
 
Subsection (5) provides that an eligible person, or a receiver on behalf of an eligible person, 
seeking payment from the Fund must submit a written application within one year after the date 
of the final judgement, the date on which a restitution order has been ripe for execution, or the 
date of any appellate decision, and at a minimum, must contain certain specified information. 
The application must contain such information as the OFR may require, including, but not 
limited to:  
 The full name, address, and contact information of the eligible person and, if applicable, the 
receiver.  
 The person ordered to pay restitution. 
 If the eligible person is a business entity, the eligible person's form and place of organization 
and a copy of the business entity's articles of incorporation, its articles of organization with 
amendments, trust agreement, or its partnership agreement.  
 A copy of the final judgment.  
 A copy of any restitution ordered pursuant to s. 517.191(3), F.S.  
 An affidavit stating either one of the following:   
o The eligible person has made all reasonable searches and inquiries to ascertain whether 
the judgment debtor possesses real or personal property or other assets subject to being 
sold or applied in satisfaction of the final judgment and, by the eligible person's search, 
that the eligible person has not discovered any property or assets. 
o The eligible person has taken necessary action on the property and assets of the 
wrongdoers but the final judgment remains unsatisfied.  
 An affidavit from the receiver stating the amount of restitution owed to the eligible person on 
whose behalf the claim is filed; the amount of any money, property, or assets paid to the 
eligible person on whose behalf the claim is filed by the person over whom the receiver is 
appointed; and the amount of any unsatisfied portion of any eligible person's order of 
restitution.  
 The eligible person's residence or domicile at the time of the violation of s. 517.07, F.S., or s. 
517.301, F.S., which resulted in the eligible person's monetary damages.  
 The amount of any unsatisfied portion of the eligible person's final judgment.  
 Whether an appeal or motion to vacate an arbitration award has been filed.  
 
Subsection (6) provides that if the OFR finds that a person is eligible and if the person has 
complied with the provisions of this section, the OFR must approves a person for payment from 
the Fund within 90 days after the OFR’s receipt of a complete application. Each eligible person 
or receiver must be given written notice, personally or by mail, that the OFR intends to approve 
or deny, or has approved or denied, the application for payment from the Fund.  
 
The current provision in s. 517.141(9), F.S., which requires an eligible person or receiver to 
assign all right, title, and interest in the final judgment or order of restitution, to the extent of 
such payment to the OFR upon receipt of the notice indicating the OFR’s intent to approve an 
application for payment from the Fund and before any disbursement, is transferred to s. 517.131, 
F.S.  
 
Subsection (8) provides that the OFR will deem an application for payment from the Fund 
abandoned if the eligible person or receiver, or any person acting on behalf of the eligible person 
or receiver, fails to timely complete the application as prescribed by FSC rule. The time period to  BILL: CS/SB 532   	Page 24 
 
complete an application is tolled during the pendency of an appeal or motion to vacate an 
arbitration award.  
 
Section 13. Amends s. 517.141, F.S., relating to payments from the Securities Guaranty Fund.  
The following terms are defined: 
 “Claimant” means a person determined eligible for payment under s. 517.131 that is 
approved by the office for payment from the Fund. 
 “Specified adult” has the same meaning as in s. 517.34(1), F.S. 
 “Final judgment” has the same meaning as in s. 517.131(1), F.S. 
 
The amount that an eligible person may recover from the Fund is increased from $10,000 to 
$15,000, or $25,000 if the victim is a specified adult. The aggregate limit on claims is increased 
from $100,000 to $250,000.  
 
All payments made from the Fund must be made by the Chief Financial Officer upon 
authorization by the OFR. The OFR must submit authorization within 30 days after the approval 
of an eligible person for payment from the Fund.   
 
The two-year payment waiting period prior to payment is eliminated. Technical conforming 
changes are made to the section to include final orders of restitution in addition to final 
judgments. 
 
The section provides that if a claimant knowingly and willfully files or causes to be filed an 
application under s. 517.131, F.S., or documents in support of the application, any of which 
contain false, incomplete, or misleading information in any material aspect, the claimant forfeits 
all payments from the Fund and that such act violates s. 517.301(1)(c), F.S. 
  
The Department of Financial Services (DFS), instead of OFR, is authorized to institute legal 
proceedings to enforce compliance with s. 517.131, F.S., and to recover moneys owed to the 
Fund, and to recover interest, costs, and attorney’s fees in any action brought pursuant to this 
section in which the DFS prevails. 
 
OFR Enforcement Authority 
 
Section 14. Amends s. 517.191, F.S., relating to enforcement by the OFR and the Attorney 
General.  
 
The amount of a civil penalty against a natural person found to have violated any provision of 
this chapter, other than s. 517.301, F.S., is increased from $10,000 to $20,000. Further, the civil 
penalty must be the greater of the specified amount or the amount of any pecuniary loss to the 
investor or pecuniary gain to a business entity. Further, the section is amended to allow for a 
civil fine of twice the amount that would otherwise be imposed if a specified adult, i.e., a natural 
person 65 years of age or older, or a vulnerable adult, is a victim of a violation of this chapter.
44
 
                                                
44
 The act defines “specified adult” as a natural person 65 years of age or older, or a natural person 18 years of age or older 
whose ability to perform the normal activities of daily living or to provide for his or her own care or protection is impaired  BILL: CS/SB 532   	Page 25 
 
The OFR is authorized to recover any costs and attorney fees related to the OFR’s investigation 
or enforcement of ch. 517, F.S., in an action for injunctive relief or the OFR’s enforcement of 
any restraining order or injunction. Any costs and attorney fees collected must be deposited in 
the Anti-Fraud Trust Fund.  
 
The section authorizes the OFR apply to the court for an order directing the defendant to make 
restitution of those sums shown by OFR to have been obtained in violation of the Act.136 OFR 
may also petition the court to impose a civil penalty against the defendant in an amount not to 
exceed: 
 $10,000 for a natural person or $25,000 for any other person, or the gross amount of 
pecuniary gain to such defendant for each such violation, other than a violation of s. 
517.301, F.S.; or 
 Plus $50,000 for a natural person or $250,000 for any other person, or the gross amount 
of pecuniary gain to such defendant for each violation of s. 517.301, F.S. 
 
The OFR is authorized to hold any control person who controls any person found to have 
violated ch. 517, F.S., or of any rule adopted thereunder, jointly and severally liable with, and to 
the same extent as, such controlled person in any action brought under this section unless the 
control person acted in good faith and did not directly or indirectly induce the act that constitutes 
the violation or cause of action. This provision is found in the federal securities statutes and is 
also found in the Uniform Securities Act and laws in other states. The provision provides a 
defense for control persons who are able to show that they were not responsible for the 
controlled person’s act that resulted in a securities law violation. 
  
Further, the OFR is authorized to hold a person who knowingly or recklessly provides substantial 
assistance to another person in violation of ch. 517, F.S., or of any rule adopted thereunder, liable 
to the same extent as the person to whom such assistance is provided.  
 
The section provides that the act does not limit the authority of OFR to bring an administrative 
action against any person that is the subject of a civil action brought pursuant to the act or limit 
the authority of OFR to engage in investigations or enforcement actions with the Attorney 
General. However, a person may not be subject to both a civil penalty described above and an 
administrative fine under subsection (3) as a result of the same facts. An enforcement action 
must be brought within 6 years after the facts giving rise to the cause of action were discovered 
or should have been discovered with the exercise of due diligence, but not more than 8 years 
after the date such violation occurred. 
 
Private Remedies Available in Case of Unlawful Sale 
 
Section 15. Amends s. 517.211, F.S., relating to private remedies available in case of unlawful 
sale. Subsection (3) allows a purchaser to hold any control person who controls any person found 
to have violated ss. 517.07 or 517.12(1), (3), (4), (8), (10), (12), (15), or (17), F.S., jointly and 
severally liable with, and to the same extent as, such controlled person in any action brought in 
                                                
due to a mental, emotional, sensory, long-term physical, or developmental disability or dysfunction, or brain damage, or the 
infirmities of aging. See s. 517.34(1)(b), and s. 415.102(28), F.S.  BILL: CS/SB 532   	Page 26 
 
action for rescission unless the control person acted in good faith and did not directly or 
indirectly induce the act that constitutes the violation or cause of action. 
 
Subsection (4) clarifies that interest accrues from the date the security is purchased. Subsection 
(8) is created to incorporate the applicable portions of current ss. 517.241(2), and 517.241(3) 
F.S., as new subsection (8) and (9), respectively, and without substantive change. Technical, 
conforming changes are also make to the section. 
 
Section 16. Repeals s. 517.221, F.S., relating to cease and desist orders, and transfers these 
provisions into s. 517.191, F.S. relating to enforcement authority of the OFR. 
 
Section 17. Repeals s. 517.241, F.S., relating to remedies, and its applicable provisions are 
transferred to ss. 517.191, F.S., and 517.211, F.S., respectively. 
 
Anti-Fraud Provisions (Sections 18-20) 
 
Sections 517.301, 517.311, and 517.312, F.S., contain the provisions creating liabilities under ch. 
517, F.S., for material misrepresentation or omissions.  
 
Section 18. Amends s. 517.301, F.S., relating to fraudulent transactions; falsification or 
concealment of facts. The section provides the following changes: 
o Subsection (2)(a) is amended to include transactions exempted under ss. 517.0611 and 
517.0612, F.S.  
o Subsection (2)(b) is amended to clarify that an offer to sell securities can be published, given 
publicity, or circulated through the use of any means.  
o Subsection (3) is created to incorporate current s. 517.311(1), F.S. The section is amended to 
include transactions exempted under ss. 517.0611 and 517.0612, F.S., and to replace the term 
“company” with “business entity” for consistency. 
o Subsection (4) is created to incorporate current s. 517.311(2), F.S. The section is amended to 
include persons within the purview of ss. 517.0611, 517.0612, and 517.081, F.S. and to 
remove gender specific pronouns. 
o Subsection (5) is created to incorporate current s. 517.311(3), F.S..  
o Subsection (6) is created to incorporate current s. 517.311(4), F.S.  
o Subsection (7) is created to incorporate current s. 517.312(1), F.S  
 
Section 19. Repeals s. 517.311, F.S., relating to false representations, deceptive words, and 
enforcement; and transfers provisions to s. 517.191, F.S., relating to enforcement. 
 
Sections 20. Repeals s. 517.312, F.S., relating to securities, investments, boiler rooms; 
prohibited practices; and remedies. Provisions are transferred to s. 517.301, F.S., relating to 
fraudulent transactions and falsification or concealment of facts. 
 
Technical, Conforming Changes 
 
Section 21. Amends s. 517.072, F.S., to revise cross references. 
 
Section 22. Amends s. 517.12, F.S., to revise cross references.  BILL: CS/SB 532   	Page 27 
 
 
Section 23. Amends s. 517.1201, F.S., to revise cross reference. 
 
Section 24. Amends s. 517.1202, F.S., to revise cross reference. 
 
Section 25. Amends s. 517.302, F.S., to revise cross reference. 
 
Effective Date 
 
Section 26. Provides this act takes effect October 1, 2024. 
IV. Constitutional Issues: 
A. Municipality/County Mandates Restrictions: 
None. 
B. Public Records/Open Meetings Issues: 
None. 
C. Trust Funds Restrictions: 
None. 
D. State Tax or Fee Increases: 
None. 
E. Other Constitutional Issues: 
None. 
V. Fiscal Impact Statement: 
A. Tax/Fee Issues: 
None. 
B. Private Sector Impact: 
The implementation of the pre-offering “test the waters” provision may reduce the costs 
of conducting an exempt offering by providing businesses the flexibility to determine the 
optimal avenue for raising capital before spending thousands of dollars on legal and 
administrative fees.  BILL: CS/SB 532   	Page 28 
 
C. Government Sector Impact: 
Indeterminate. The bill requires issuers conducting an offering under the accredited 
investor exemption to file a notice of transaction, a consent to service of process, and a 
copy of the general announcement with the Office of Financial Regulation (OFR). 
Further, the bill requires issuers conducting an offering under Florida Invest Local 
Exemption to file a notice of the offering and a copy of the disclosure document with the 
OFR. The OFR will need to review these documents, and the bill does not provide 
additional funding for staff to conduct such reviews. 
VI. Technical Deficiencies: 
None.  
VII. Related Issues: 
None. 
VIII. Statutes Affected: 
This bill substantially amends sections 517.021, 517.051, 517.061, 517.0611, 517.0612, 517.081, 
517.101, 517.131, 517.141, 517.191, 517.211, 517.301, 517.072, 517.12, 517.1201, 517.1202, 
and 517.302 of the Florida Statutes.  
This bill creates sections 517.0613, 517.0614, 517.0615, 517.0616, of the Florida Statutes:   
This bill repeals sections 517.221, 517.241, 517.311, 517.312, of the Florida Statutes:   
IX. Additional Information: 
A. Committee Substitute – Statement of Substantial Changes: 
(Summarizing differences between the Committee Substitute and the prior version of the bill.) 
CS on January 16, 2024: 
The CS provides the following changes: 
 Makes the revisions to the Securities Guaranty Fund prospective to October 1, 2024.  
 Clarifies the exemption for transactions conducted through alternative trading 
systems. 
 Provides technical, conforming changes.   
B. Amendments: 
None. 
This Senate Bill Analysis does not reflect the intent or official position of the bill’s introducer or the Florida Senate.