Ask Reggi Your Question Now

Reggi is the free generative AI assistance for regulatory compliance
Ask a Question

Can I offer equity to investors without violating securities laws in Hawaii? What are the requirements?

To offer equity to investors in Hawaii, you must comply with the securities laws in the state. The Hawaii Revised Statutes (HIRS) provide regulations for the issuance and forfeiture of securities, investment adviser registration requirements and exemptions, agent registration requirements and exemptions, and post-registration requirements.

Securities Law in Hawaii

Chapter 485A of the HIRS regulates securities law in Hawaii. It is unlawful for a person to transact business in Hawaii as an investment adviser unless the person is registered under this chapter as an investment adviser or is exempt from registration as an investment adviser under subsection (b) [4.1]. Similarly, it is unlawful for an individual to transact business in Hawaii as an agent unless the individual is registered under this chapter as an agent or is exempt from registration as an agent under subsection (b) [4.2].

Issuance of Securities in Hawaii

No proposed stock insurer or corporation shall issue any share of stock or participation agreement until all subscriptions received under the solicitation permit have been fully paid in cash or securities eligible for investment of funds of insurers, or other property after securing the written approval of the commissioner [3.1].

Requirements for Investment Advisers and Broker-Dealers

A rule adopted or order issued under this chapter may establish minimum financial requirements for broker-dealers registered or required to be registered under this chapter and investment advisers registered or required to be registered under this chapter [4.3]. Broker-dealer records required to be maintained may be maintained in any form of data storage acceptable under section 17(a) of the Securities Exchange Act of 1934 if they are readily accessible to the commissioner [4.3].

Exemptions from Registration

The following persons are exempt from the registration requirement of subsection (a) of Chapter 485A:

  • A person without a place of business in Hawaii that is registered under the securities act of the state in which the person has its principal place of business if its only clients in Hawaii are federal covered investment advisers, investment advisers registered under this chapter, or broker-dealers registered under this chapter [4.1].
  • An individual who represents a broker-dealer in effecting transactions in Hawaii limited to those described in section 15(i)(3) of the Securities Exchange Act of 1934, relating to de minimis transactions by associated persons [4.2].

Therefore, to offer equity to investors in Hawaii, you must comply with the securities laws in the state. This includes registering as an investment adviser or agent, complying with financial requirements, and ensuring that all subscriptions have been fully paid. There are exemptions available for certain individuals and entities.

Source(s):
Jurisdiction

Hawaii