S.D. Admin. R. 20:08:07:37

Current through Register Vol. 51, page 54, October 28, 2024

Section 20:08:07:37 - Twenty-five purchasers exempt transaction

(1) Payment of compensation to a finder as set forth in § 20:08:03:17 is not considered a violation of SDCL 47-31B-202(14)(C).

(2) For calculating the number of purchasers under SDCL 47-31B-202(14)(A), the following purchasers shall be excluded:

(a) Any relative, spouse, or relative of the spouse of a purchaser who has the same principal residence as the purchaser;

(b) Any trust or estate in which a purchaser and any of the persons related to the purchaser as specified in § 20:08:07:37(2)(a) or 20:08:07:37(2)(c) collectively have more than 50 percent of the beneficial interest (excluding contingent interests);

(c) Any corporation or other organization of which a purchaser and any of the persons related to the purchaser as specified in subsection 20:08:07:37(2)(a) or 20:08:07:37(2)(b) of this section collectively are beneficial owners of more than 50 percent of the equity securities (excluding directors' qualifying shares) or equity interest;

(d) A corporation, partnership, or other entity shall be counted as one purchaser. However, if that entity is organized for the specific purpose of acquiring the securities offered, then each beneficial owner of equity securities or equity interests in the entity shall count as a separate purchaser except to the extent provided in subdivision (a) of this section;

(e) A non-contributory employee benefit plan within the meaning of Title 1 of the Employee Retirement Income Security Act of 1974 shall be counted as one purchaser where the trustee makes all investment decisions for the plan;

(f) Any executive officer of the issuer offering and selling securities may not be counted as a purchaser pursuant to SDCL 47-31B-202(14). "Executive officer" means the president, any vice president in charge of a principal business unit, division, or function (such as sales, administration, or finance), any other officer who performs a policy function, or any other person who performs similar policy making functions for the issuer. Executive officers of subsidiaries may be deemed executive officers of the issuer if they perform such policy making functions for the issuer.

(3) Integration: Pursuant to SDCL 47-31B-202(14), in reference to the prefatory language, "a single issue" signifies that two or more issues can be integrated and potentially destroy the exemption. There are two general tests for integration.

(a) Offers and sales that are made more than six months before the start of an offering or are made more than six months after completion of an offering will not be considered part of that offering, so long as during those six month periods there are no offers or sales of securities by or for the issuer that are of the same or a similar class as those previously offered and sold pursuant to a transaction exempt under SDCL 47-31B-202(14).

(b) If two issues occur within six months, integration may occur depending upon the following factors:

(i) Whether the offerings are part of a single plan of financing;

(ii) Whether the offerings involve issuance of the same class of securities;

(iii) Whether the offerings are made at or about the same time;

(iv) Whether the same type of consideration is to be received; and

(v) Whether the offerings are made for the same general purpose.

S.D. Admin. R. 20:08:07:37

33 SDR 63, effective 10/18/2006; 37 SDR 112, effective 12/9/2010.

General Authority: SDCL 47-31B-605(a)(2) and (3).

Law Implemented: SDCL 47-31B-203.