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

Based on the information provided in the context documents, it is possible to offer equity to investors in Vermont without violating securities laws if certain requirements are met.

Securities Registration Requirement

According to 9 VTST 5301, it is unlawful for a person to offer or sell a security in Vermont unless the security is a federal covered security, the security, transaction, or offer is exempted from registration under sections 5201 through 5203 of this chapter, or the security is registered under this chapter.

Exempt Securities

Certain securities are exempt from the requirements of sections 5301 through 5306 and 5504 of this chapter, according to 9 VTST 5201. These include securities issued, insured, or guaranteed by the United States, a state, a political subdivision of a state, a public authority, agency, or instrumentality of one or more states, or a person controlled or supervised by and acting as an instrumentality of the United States under authority granted by Congress. Additionally, securities issued, insured, or guaranteed by a foreign government with which the United States maintains diplomatic relations, or any of its political subdivisions, are also exempt.

Broker-Dealer Registration Requirement and Exemptions

9 VTST 5401 outlines the broker-dealer registration requirement and exemptions in Vermont. It is unlawful for a person to transact business in Vermont as a broker-dealer unless the person is registered under this chapter as a broker-dealer or is exempt from registration as a broker-dealer under subsection (b) or (d) of this section. The following persons are exempt from the registration requirement of subsection (a) of this section: a broker-dealer without a place of business in Vermont if its only transactions effected in Vermont are with certain specified entities, including the issuer of the securities involved in the transactions, a broker-dealer registered as a broker-dealer under this chapter or not required to be registered as a broker-dealer under this chapter, and an institutional investor.

Investment Adviser Registration Requirement and Exemptions

9 VTST 5403 outlines the investment adviser registration requirement and exemptions in Vermont. It is unlawful for a person to transact business in Vermont 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) of this section. The following persons are exempt from the registration requirement of subsection (a) of this section: a person without a place of business in Vermont 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 Vermont are federal covered investment advisers, investment advisers registered under this chapter, or broker-dealers registered under this chapter, institutional investors, bona fide preexisting clients whose principal places of residence are not in Vermont if the investment adviser is registered under the securities act of the state in which the clients maintain principal places of residence, or any other client exempted by rule adopted or order issued under this chapter.

Restriction on Transfer of Shares and Other Securities

According to 11A VTST 6.27, the articles of incorporation, bylaws, an agreement among shareholders, or an agreement between shareholders and the corporation may impose restrictions on the transfer or registration of transfer of shares of the corporation. A restriction does not affect shares issued before the restriction was adopted unless the holders of such shares agree in writing to the restriction, or voted in favor of the restriction. A restriction on the transfer or registration of transfer of shares is valid and enforceable against the holder or a transferee of the holder if the restriction is authorized by this section and its existence is noted conspicuously on the front or back of the certificate or is contained in the information statement required by subsection 6.26(b) of this title. Unless so noted, a restriction is not enforceable against a person without knowledge of the restriction.

Based on the above information, it is possible to offer equity to investors in Vermont without violating securities laws if the securities being offered fall under the exempt securities category, the person offering the securities is exempt from broker-dealer registration, and the individual transacting business as an investment adviser representative is exempt from registration. Additionally, if the equity is being offered by a corporation, the articles of incorporation, bylaws, an agreement among shareholders, or an agreement between shareholders and the corporation may impose restrictions on the transfer or registration of transfer of shares of the corporation. A restriction does not affect shares issued before the restriction was adopted unless the holders of such shares agree in writing to the restriction, or voted in favor of the restriction. A restriction on the transfer or registration of transfer of shares is valid and enforceable against the holder or a transferee of the holder if the restriction is authorized by this section and its existence is noted conspicuously on the front or back of the certificate or is contained in the information statement required by subsection 6.26(b) of this title. Unless so noted, a restriction is not enforceable against a person without knowledge of the restriction.

It is important to note that this response is based solely on the information provided in the context documents and does not take into account any additional information or circumstances that may affect the legality of offering equity to investors in Vermont. It is recommended that you consult with a legal professional for specific guidance on your situation.

Jurisdiction

Vermont

• General