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

To offer equity to investors in Wisconsin, you must comply with the state’s securities laws. The requirements for offering securities in Wisconsin are outlined in several statutes, including WIST 611.31, WIST 201.03, WIST 551.201, and WIST 551.202.

Requirements for Offering Securities in Wisconsin

  1. Registration: No securities issued by a domestic insurance corporation may be sold by or for the corporation unless they are registered or exempt from registration under ch. 551 [1.1]. Similarly, no securities shall be issued by any public service corporation until it shall first have obtained from the commission, and recorded upon its books a certificate authorizing such issue [3.1].
  2. Exempt Transactions: Certain transactions are exempt from the requirements of ss. 551.301 to 551.306 and 551.504, including an isolated nonissuer transaction, a nonissuer transaction by or through a broker-dealer registered or exempt from registration under this chapter, and a resale transaction by a sponsor of a unit investment trust registered under the Investment Company Act of 1940 [2.2]. Additionally, 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, a political subdivision 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 the Congress are exempt from the requirements of ss. 551.301 to 551.306 and 551.504 [2.1].
  3. Approval by Commissioner: Securities of a domestic insurance corporation may not be registered under ch. 551 without prior approval of the commissioner of insurance. Issuance of an organization permit under s. 611.13 constitutes such approval for the securities described in the permit [1.1].
  4. Proper Corporate Purposes: The commission shall not authorize the issuance of securities for any purposes which are not proper corporate purposes, or in an amount greater than is reasonably necessary for such corporate purposes, having in view the immediate requirements of the corporation and its prospective requirements over a reasonable period in the future, and other relevant considerations [3.1].

Conclusion

To offer equity to investors in Wisconsin, you must comply with the state’s securities laws, including registration requirements and proper corporate purposes. Certain transactions may be exempt from registration requirements, including 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, a political subdivision 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 the Congress. Please note that this is a general overview and you should consult with a legal professional for specific guidance on your situation.

Source(s):
Jurisdiction

Wisconsin