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Securities Registration and Exemption FAQs

  1. What are the filing requirements for an offering exempt under federal Rule 506?
  2. Is there an annual filing requirement with the Securities Division for an offering exempt under federal Rule 506?
  3. What are the filing requirements for an offering of securities that are listed on the NYSE, AMEX, or NASDAQ NMS?
  4. What are the filing requirements for municipal bonds exempt under §3(a)(2) of the Securities Act of 1933?
  5. Is Washington a "merit" state?
  6. What exemptions under RCW 21.20.310 and RCW 21.20.320 require some type of filing with the Division?
  7. We are doing a Reg. D (or another private offering) in several states, but we only have one prospective Washington investor. Can we rely on the isolated transaction exemption contained in RCW 21.20.320(1)?
  8. I'm having a problem with my 401k plan. Is there any government agency that can help me?
  9. Under RCW 21.20.310(8), what qualifies as a pension plan or institutional buyer?
  10. How do I request a no-action or interpretive letter?
  11. The issuer would like to post its offering on the Internet. Is that allowable?
  12. What are the filing requirements for registration by coordination (including Regulation A filings)?

 

What are the filing requirements for an offering exempt under federal Rule 506?

Notice filings for offerings made under either Rule 506(b) or Rule 506(c) must be made through NASAA’s EFD system within 15 days after the first sale in Washington in accordance with WAC 460-44A-503(1)(a)(i)(A) and (B). In addition to the information contained in the Form D filed federally with the SEC, the EFD system will collect the $300 filing fee and request the date of first sale in Washington or an indication that sales have yet to occur in Washington.

Is there an annual filing requirement with the Securities Division for an offering exempt under federal Rule 506?

Yes, for ongoing offerings an issuer is required to file an annual amendment through NASAA’s EFD system. The annual amendment must be filed on or before the first anniversary of the initial filing of the Form D, or the filing of the most recent amendment to the Form D, with the State of Washington if the offering is continuing in Washington at that time. There are no fees for amendment filings related to offerings made in reliance upon federal Rule 506. See WAC 460-44A-503(3)(c).

What are the filing requirements for an offering of securities that are listed on the NYSE, AMEX, or NASDAQ NMS?

These securities are exempt from registration pursuant to WAC 460-42A-081 and there is no filing requirement for securities listed on these exchanges. However, if the securities will not be offered through a registered broker-dealer, then an agent of the issuer must be registered due to the lack of an exception under the definition of salesperson in RCW 21.20.005(2).

 

What are the filing requirements for municipal bonds exempt under §3(a)(2) of the Securities Act of 1933?

Washington law contains an exemption from securities registration for certain municipal bonds. See RCW 21.20.310(1), WAC 460-42A-020, and WAC 460-42A-030. If the securities offering does not qualify for the exemption but the securities offered are covered securities pursuant to Section 18(b)(4)(C) of the Securities Act of 1933, then a notification filing is required and consists of a Municipal Security Notice Filing Form, a Form U-2 and the filing fee (check payable to the Washington State Treasurer based on the amount to be offered in Washington: $100 for the first $100,000, and 1/20 of 1% for any amount above that). See WAC 460-18A-100.

 

Is Washington a "merit" state?

Yes. The rules which regulate registered offerings are for the most part found in WAC 460-16A. The Division has also adopted a number of the NASAA guidelines, which are listed in WAC 460-16A-205.

 

What exemptions under RCW 21.20.310 and RCW 21.20.320 require some type of filing with the Division?

The exemptions listed below require a filing - all other exemptions are self-executing (and therefore do not require the filing of a consent to service of process):

RCW 21.20.310(1): Offerings by Washington issuers which don't qualify for the exemption under the statute or under WAC 460-42A-030 must either register or request that the Securities Administrator consider issuing a discretionary order of exemption. A request for an order should be submitted by sending: (1) a cover letter requesting the discretionary order under the exemption, stating the reasons why registration of the offering is not necessary to protect investors, (2) a Form U-2, and (3) a copy of the official statement or preliminary official statement. Municipal securities offerings by issuers from other states that are covered by Section 18(b)(4)(C) of the Securities Act of 1933 must complete a notification filing by filing the Muncipal Security Notice Form, Form U-2*, and paying the fee set forth in RCW 21.20.340(1)(b).

RCW 21.20.310(10): If the employee benefit plan is not qualified under Sections 401, 422, or 423 of the Internal Revenue Code, then a filing must be made. The filing consists of a cover letter claiming the exemption, a copy of the plan, and a Form U-2. There is no fee.

RCW 21.20.310(11): Nonprofit organizations selling securities to members, contributors or participants in the organization, may claim the exemption by filing the Notification of Claim of Exemption, Form U-2, a copy of their (or parent organization's) tax exempt status letter issued by the IRS, and a check for $50 payable to the "Washington State Treasurer."

RCW 21.20.320(1): This provision contains language for three different exemptions. The first two "isolated transaction" and "sales not involving a public offering" are self-executing. These exemptions, and who is entitled to claim them, are discussed more fully in WAC 460-44A-050. The Securities Division has not adopted an exemption under the enabling language contained at the end of RCW 21.20.320(1), "... any transaction effected in accordance with any rule by the director...."

RCW 21.20.320(9): "Any transaction effected in accordance with the terms and conditions of any rule by the Director if the aggregate offering amount does not exceed five million dollars..." The rule adopted by the Division under this statute is WAC 460-44A-504. Our version of Reg. D 504 is different from the federal version in several important respects, so please review our Reg. D rules carefully. In terms of a filing, you will need to file a copy of the Form D filed electronically with the SEC, a check for $50 made payable to the “Washington State Treasurer” and an indication that no sales have occurred in Washington prior to filing. If you will be relying on the intrastate offering exemption in Rule 147 or 147A federally, you will instead need to file our Notification of Claim of Exemption form, a Form U-2, and an indication that sales have not occurred in Washington prior to filing, and a check for $50 payable to the “Washington State Treasurer.” The filing must be made 10 business days prior to receipt of consideration or a signed subscription agreement, although the Division routinely accelerates the effective date to the date we issue the exemption acknowledgment letter, which is generally within one to two days of receipt of the filing, depending on workload. The Small Business Assistance Program Section has further information Reg. D 504.

RCW 21.20.320(11)(b): This statute provides for a filing in order to claim the exemption for offers or sales to existing security holders if the offering involves commissions. Please note that no filing is necessary if commissions or other remuneration will not be paid in connection with solicitations in this state. The Division has not adopted any particular notification form. Please submit a cover letter claiming the exemption which includes a short description of the offering and who the offerees are in Washington, and enclose any offering documents. There is no filing fee. You will be issued an exemption acknowledgment letter unless the Division issues an order disallowing the exemption.

RCW 21.20.320(16): In order to claim the exemption, please submit the form for Cooperative/Mutual Associations Notification of Claim of Exemption at least 10 business days prior to any solicitation in Washington. There is no filing fee.

RCW 21.20.320(17): This is the enabling language for the adoption in Washington of the Model Accredited Investor Exemption (MAIE) (see WAC 460-44A-300).

To claim the MAIE, file the MAIE form; a copy of the general announcement, Form U-2; and $300 filing fee (checks made payable to the “Washington State Treasurer”) within 15 days of the first sale in Washington.

 

We are doing a Reg. D (or another private offering) in several states, but we only have one prospective Washington investor. Can we rely on the isolated transaction exemption contained in RCW 21.20.320(1)?

Probably not. The Division has adopted WAC 460-44A-050(1) in which the Division has interpreted "isolated transaction" for an issuer offering to be not more than three sales nationwide in a 24 month period. Generally, you will need to determine what exemption you will be relying on federally and then determine if there is a corresponding Washington exemption available. If you are going to be relying on the 4(2) non-public offering exemption under the 1933 Act, then Washington has a corresponding exemption under RCW 21.20.320(1) and WAC 460-44A-050(2).

 

I'm having a problem with my 401k plan. Is there any government agency that can help me?

Most pension plans are subject to ERISA, a federal statute over which the Employee Benefits Security Administration of the federal Department of Labor has jurisdiction. The agency's home page has information on how to obtain information and protect your pension. The agency also has a district office in Seattle, which can be reached at (206) 553-4244.

 

Under RCW 21.20.310(8), what qualifies as a pension plan or institutional buyer?

See Securities Act Interpretive Statement-10 and Securities Act Interpretive Statement-11 for the Division's interpretation of these terms.

 

How do I request a no-action or interpretive letter?

See WAC 460-16A-020 for instructions regarding the procedure to be followed.

 

The issuer would like to post its offering on the Internet. Is that allowable?

Generally no, unless the offering is currently registered in Washington or is not being offered in Washington and the website contains certain disclosures. See Securities Act Policy Statement-16 for the Division's position regarding Internet offerings.

 

What are the filing requirements for registration by coordination (including Regulation A filings)?

Forms U-1, U-2 and U-2a

One copy of the Registration Statement and Exhibits (if underwriters' warrants will be issued, make sure a copy of the underwriter's warrant is included as we will want to review it)

Filing Fee: Check payable to the “Washington State Treasurer” for the amount to be offered in Washington (the minimum fee of $100 registers the first $100,000, then 1/40th of 1% for any amount over that - equals $25 for each additional $100,000)

Offerings in excess of $1 million must include audited financial statements of the issuer

One copy of any red herring prospectus to be used

One marked copy of any pre- and post-effective amendments to the registration statement

One copy of the final prospectus

If your question has not been answered here, there are also Frequently Asked Questions in the Small Business Assistance Program Section which are targeted to smaller issuers.