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D.C. Municipal Regulations (Last Updated: September 13, 2017) |
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Title 26. INSURANCE, SECURITIES, AND BANKING |
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SubTilte 26-B. SECURITIES |
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Chapter 26-B2. REGISTRATION OF SECURITIES OFFERINGS |
Section 26-B255. ADDITIONAL REQUIREMENTS FOR ISSUERS
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255.1An offering document shall be delivered to each offeree at least 24 hours prior to any sale of securities in reliance upon the District of Columbia intrastate exemption. The offering document must:
(a) Inform all prospective purchasers of securities offered under this subsection that the securities have not been registered under federal or district securities law and that the securities are subject to limitations on resale.
(b) Shall display the following legend conspicuously on the cover page of the disclosure document:
“IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE ISSUER’S DISCLOSURE STATEMENT, INCLUDING THE TERMS OF THE OFFERING AND THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES REGULATOR OR THE DEPARTMENT OF INSURANCE, SECURITIES AND BANKING OR OTHER REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED BY SUBSECTION (e) OF SEC RULE 147 (17 C.F.R. § 230.147(e)) AS PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE DISTRICT OF COLUMBIA SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.”
(c) The offering document must be signed by a duly authorized representative of the issuer who by such action shall certify that the issuer has made reasonable efforts to verify the material accuracy and completeness of the information therein contained.
255.2An issuer shall maintain records of all offers and sales of securities and shall provide ready access to the records to the Department, upon request.
255.3An issuer of a security, the offer and sale of which is exempt under this section, shall provide, free of charge, an annual report to the issuer's investors and shall file a copy of the report with the Department, for each of the three fiscal years of the issuer, of which the first ends first after the offering is begun. An issuer may satisfy the delivery requirement of this subsection by making the information available on the issuer’s website, if the information is made available within 60 days after the end of each fiscal year and remains available until the succeeding annual report is issued. The report shall contain all of the following:
(a) Compensation received by each director and executive officer, including cash compensation earned since the previous report and on an annual basis and any bonuses, stock options, other rights to receive securities of the issuer or any affiliate of the issuer, or other compensation received;
(b) An analysis by management of the issuer of the business operations and financial condition of the issuer;
(c) Operating results and financial statement; AND
(d) A statement of the use of the proceeds of the offering.
255.4 All statements and representations made in filings with the Department by the issuer and the executive officers and more than ten percent (10%) shareholders of the issuer in connection with this offering shall be subject to Section 502 of the Securities Act of 2000, D.C. Official Code § 31-5605.02, and the Department may bring enforcement actions under Sections 602 or 603 of the Act or refer the violations to the US Attorney for the District of Columbia or the Attorney General of the District of Columbia pursuant to Section 604 of the Act. Purchasers of the securities offered under this exemption may bring actions under Section 607 of the Act for violations of the Act or these regulations.