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

To offer equity to investors without violating securities laws in Indiana, you must comply with the Indiana Securities Law (IC 23). The law defines “equity security” as any stock or similar security, or any security convertible into such a security, or carrying any warrant or right to subscribe to or purchase such a security [1.1].

Requirements for Offering Equity Securities

To offer equity securities, you must comply with the registration requirements under IC 23-19-4-3. It is unlawful for a person to transact business in Indiana as an investment adviser unless the person is registered under this article as an investment adviser or is exempt from registration as an investment adviser [5.3].

Exemptions

There are exemptions from the registration requirement of IC 23-19-4-3. For example, a person without a place of business in Indiana that is registered under the securities act of the state in which the person has its principal place of business is exempt if its only clients in Indiana are federal covered investment advisers, investment advisers registered under this article, or broker-dealers registered under this article [5.3].

Additionally, the provisions of sections 1, 2, and 3 of IC 27-2-10-7 do not apply to transactions in equity securities of a domestic stock insurance company if such securities are registered, or required to be registered, pursuant to section 12 of the Securities Exchange Act of 1934 or if such domestic stock insurance company does not have any class of its equity securities held of record by one hundred or more persons on the last business day of the year next preceding the year in which equity securities of the company would be subject to the provisions of sections 1, 2, and 3 of this chapter except for the provisions of this subdivision [1.2].

Conclusion

To offer equity to investors without violating securities laws in Indiana, you must comply with the registration requirements under IC 23-19-4-3 or qualify for an exemption. Additionally, the provisions of sections 1, 2, and 3 of IC 27-2-10-7 do not apply to transactions in equity securities of a domestic stock insurance company if such securities are registered, or required to be registered, pursuant to section 12 of the Securities Exchange Act of 1934 or if such domestic stock insurance company does not have any class of its equity securities held of record by one hundred or more persons on the last business day of the year next preceding the year in which equity securities of the company would be subject to the provisions of sections 1, 2, and 3 of this chapter except for the provisions of this subdivision. Please note that this is a general overview and you should consult with a legal professional for specific advice on your situation.

Source(s):
Jurisdiction

Indiana