CHAPTER 2. EXEMPTIONS FROM REGISTRATION OF SECURITIES
IC 23-19-2
Chapter 2. Exemptions From Registration of Securities
IC 23-19-2-1
Exempt securities
Sec. 1. The following securities are exempt from the requirementsof IC 23-19-3-1 through IC 23-19-3-6 and IC 23-19-5-4:
(1) A security, including a revenue obligation or a separatesecurity as defined in Rule 131 (17 CFR 230.131) adoptedunder the Securities Act of 1933, issued, insured, or guaranteedby the United States; by a state; by a political subdivision of astate; by a public authority, agency, or instrumentality of one(1) or more states; by a political subdivision of one (1) or morestates; or by a person controlled or supervised by and acting asan instrumentality of the United States under authority grantedby Congress; or a certificate of deposit for any of the foregoing.
(2) A security issued, insured, or guaranteed by a foreigngovernment with which the United States maintains diplomaticrelations, or any of its political subdivisions, if the security isrecognized as a valid obligation by the issuer, insurer, orguarantor.
(3) A security issued by and representing or that will representan interest in or a direct obligation of, or be guaranteed by:
(A) an international banking institution;
(B) a banking institution organized under the laws of theUnited States; a member bank of the Federal ReserveSystem; or a depository institution a substantial part of thebusiness of which consists or will consist of receivingdeposits or share accounts that are insured to the maximumamount authorized by statute by the Federal DepositInsurance Corporation, the National Credit Union ShareInsurance Fund, or a successor authorized by federal law orexercising fiduciary powers that are similar to thosepermitted for national banks under the authority of theComptroller of Currency under Section 1 of Public Law87-722 (12 U.S.C. 92a); or
(C) any other depository institution, unless by rule or orderthe commissioner proceeds under section 4 of this chapter.
(4) A security issued by and representing an interest in or a debtof, or insured or guaranteed by, an insurance companyauthorized to do business in Indiana.
(5) A security issued or guaranteed by a railroad, other commoncarrier, public utility, or public utility holding company that is:
(A) regulated in respect to its rates and charges by theUnited States or a state;
(B) regulated in respect to the issuance or guarantee of thesecurity by the United States, a state, Canada, or a Canadianprovince or territory; or
(C) a public utility holding company registered under thePublic Utility Holding Company Act of 1935 or a subsidiary
of such a registered holding company within the meaning ofthat act.
(6) A federal covered security specified in Section 18(b)(1) ofthe Securities Act of 1933 (15 U.S.C. 77r(b)(1)) or by ruleadopted under that provision or a security listed or approved forlisting on another securities market specified by rule under thisarticle; a put or a call option contract; a warrant; a subscriptionright on or with respect to such securities; an option or similarderivative security on a security or an index of securities orforeign currencies issued by a clearing agency registered underthe Securities Exchange Act of 1934 and listed or designatedfor trading on a national securities exchange, a facility of anational securities exchange, or a facility of a national securitiesassociation registered under the Securities Exchange Act of1934 or an offer or sale, of the underlying security inconnection with the offer, sale, or exercise of an option or othersecurity that was exempt when the option or other security waswritten or issued; or an option or a derivative securitydesignated by the Securities and Exchange Commission underSection 9(b) of the Securities Exchange Act of 1934 (15 U.S.C.78i(b)).
(7) A member's or owner's interest in, or a retention certificateor like security given in lieu of a cash patronage dividend issuedby, a cooperative organized and operated as a nonprofitmembership cooperative under the cooperative laws of a state,but not a member's or owner's interest, retention certificate, orlike security sold to persons other than bona fide members ofthe cooperative.
(8) An equipment trust certificate with respect to equipmentleased or conditionally sold to a person, if any security issuedby the person would be exempt under this section or would bea federal covered security under Section 18(b)(1) of theSecurities Act of 1933 (15 U.S.C. 77r(b)(1)).
(9) A security issued by a nonprofit corporation as defined bySection 501(c)(3) of the Internal Revenue Code that isdesignated by the governor as the secondary market forguaranteed student loans under IC 20-12-21.2.
As added by P.L.27-2007, SEC.23.
IC 23-19-2-2
Exempt transactions
Sec. 2. The following transactions are exempt from therequirements of IC 23-19-3-1 through IC 23-19-3-6 andIC 23-19-5-4:
(1) An isolated nonissuer transaction, whether effected by orthrough a broker-dealer or not.
(2) A nonissuer transaction by or through a broker-dealerregistered, or exempt from registration under this article, and aresale transaction by a sponsor of a unit investment trustregistered under the Investment Company Act of 1940, in a
security of a class that has been outstanding in the hands of thepublic for at least ninety (90) days, if, at the date of thetransaction:
(A) the issuer of the security is engaged in business, theissuer is not in the organizational stage or in bankruptcy orreceivership, and the issuer is not a blank check, blind pool,or shell company that has no specific business plan orpurpose or has indicated that its primary business plan is toengage in a merger or combination of the business with, oran acquisition of, an unidentified person;
(B) the security is sold at a price reasonably related to itscurrent market price;
(C) the security does not constitute the whole or part of anunsold allotment to, or a subscription or participation by, thebroker-dealer as an underwriter of the security or aredistribution;
(D) a nationally recognized securities manual or itselectronic equivalent designated by rule adopted or orderissued under this article or a record filed with the Securitiesand Exchange Commission that is publicly availablecontains:
(i) a description of the business and operations of theissuer;
(ii) the names of the issuer's executive officers and thenames of the issuer's directors, if any;
(iii) an audited balance sheet of the issuer as of a datewithin eighteen (18) months before the date of thetransaction or, in the case of a reorganization or mergerwhen the parties to the reorganization or merger each hadan audited balance sheet, a pro forma balance sheet for thecombined organization; and
(iv) an audited income statement for each of the issuer'stwo (2) immediately previous fiscal years or for the periodof existence of the issuer, whichever is shorter, or, in thecase of a reorganization or merger when each party to thereorganization or merger had audited income statements,a pro forma income statement; and
(E) any one (1) of the following requirements is met:
(i) The issuer of the security has a class of equitysecurities listed on a national securities exchangeregistered under Section 6 of the Securities Exchange Actof 1934 or designated for trading on the NationalAssociation of Securities Dealers Automated QuotationSystem.
(ii) The issuer of the security is a unit investment trustregistered under the Investment Company Act of 1940.
(iii) The issuer of the security, including its predecessors,has been engaged in continuous business for at least three(3) years.
(iv) The issuer of the security has total assets of at least
two million dollars ($2,000,000) based on an auditedbalance sheet as of a date within eighteen (18) monthsbefore the date of the transaction or, in the case of areorganization or merger when the parties to thereorganization or merger each had such an audited balancesheet, a pro forma balance sheet for the combinedorganization.
(3) A nonissuer transaction by or through a broker-dealerregistered or exempt from registration under this article in asecurity of a foreign issuer that is a margin security defined inregulations or rules adopted by the Board of Governors of theFederal Reserve System.
(4) A nonissuer transaction by or through a broker-dealerregistered or exempt from registration under this article in anoutstanding security if the guarantor of the security files reportswith the Securities and Exchange Commission under thereporting requirements of Section 13 or 15(d) of the SecuritiesExchange Act of 1934 (15 U.S.C. 78m or 78o(d)).
(5) A nonissuer transaction by or through a broker-dealerregistered or exempt from registration under this article in asecurity that:
(A) is rated at the time of the transaction by a nationallyrecognized statistical rating organization in one (1) of itsfour (4) highest rating categories; or
(B) has a fixed maturity or a fixed interest or dividend, if:
(i) a default has not occurred during the current fiscal yearor within the three (3) previous fiscal years, or during theexistence of the issuer and any predecessor if less thanthree (3) fiscal years, in the payment of principal, interest,or dividends on the security; and
(ii) the issuer is engaged in business, is not in theorganizational stage or in bankruptcy or receivership, andis not and has not been within the previous twelve (12)months a blank check, blind pool, or shell company thathas no specific business plan or purpose or has indicatedthat its primary business plan is to engage in a merger orcombination of the business with, or an acquisition of, anunidentified person.
(6) A nonissuer transaction by or through a broker-dealerregistered or exempt from registration under this articleeffecting an unsolicited order or offer to purchase.
(7) A nonissuer transaction executed by a bona fide pledgeewithout the purpose of evading this article.
(8) A nonissuer transaction by a federal covered investmentadviser with investments under management in excess of onehundred million dollars ($100,000,000) acting in the exercise ofdiscretionary authority in a signed record for the account ofothers.
(9) A transaction in a security, whether or not the security ortransaction is otherwise exempt, in exchange for one (1) or
more bona fide outstanding securities, claims, or propertyinterests, or partly in such exchange and partly for cash, if theterms and conditions of the issuance and exchange or thedelivery and exchange and the fairness of the terms andconditions have been approved by the commissioner after ahearing.
(10) A transaction between the issuer or other person on whosebehalf the offering is made and an underwriter, or amongunderwriters.
(11) A transaction in a note, bond, debenture, or other evidenceof indebtedness secured by a mortgage or other securityagreement if:
(A) the note, bond, debenture, or other evidence ofindebtedness is offered and sold with the mortgage or othersecurity agreement as a unit;
(B) a general solicitation or general advertisement of thetransaction is not made; and
(C) a commission or other remuneration is not paid or given,directly or indirectly, to a person not registered under thisarticle as a broker-dealer or as an agent.
(12) A transaction by an executor, administrator of an estate,sheriff, marshal, receiver, trustee in bankruptcy, guardian, orconservator.
(13) A sale or offer to sell to:
(A) an institutional investor;
(B) a federal covered investment adviser; or
(C) any other person exempted by rule adopted or orderissued under this article.
(14) A sale or an offer to sell securities of an issuer, if thetransaction is part of a single issue in which:
(A) not more than twenty-five (25) purchasers are present inthis state during any twelve (12) consecutive months, otherthan those designated in subdivision (13);
(B) a general solicitation or general advertising is not madein connection with the offer to sell or sale of the securities;
(C) a commission or other remuneration is not paid or given,directly or indirectly, to a person other than a broker-dealerregistered under this article or an agent registered under thisarticle for soliciting a prospective purchaser in this state; and
(D) the issuer reasonably believes that all the purchasers inthis state, other than those designated in subdivision (13),are purchasing for investment.
(15) A transaction under an offer to existing security holders ofthe issuer, including persons that at the date of the transactionare holders of convertible securities, options, or warrants, if acommission or other remuneration, other than a standbycommission, is not paid or given, directly or indirectly, forsoliciting a security holder in this state.
(16) An offer to sell, but not a sale, of a security not exemptfrom registration under the Securities Act of 1933 if: (A) a registration or offering statement or similar record asrequired under the Securities Act of 1933 has been filed, butis not effective, or the offer is made in compliance with Rule165 adopted under the Securities Act of 1933 (17 CFR230.165); and
(B) a stop order of which the offeror is aware has not beenissued against the offeror by the commissioner or theSecurities and Exchange Commission, and an audit,inspection, or proceeding that is public and that mayculminate in a stop order is not known by the offeror to bepending.
(17) An offer to sell, but not a sale of, a security exempt fromregistration under the Securities Act of 1933 if:
(A) a registration statement has been filed under this article,but is not effective;
(B) a solicitation of interest is provided in a record toofferees in compliance with a rule adopted by thecommissioner under this article; and
(C) a stop order of which the offeror is aware has not beenissued by the commissioner under this article and an audit,inspection, or proceeding that may culminate in a stop orderis not known by the offeror to be pending.
(18) A transaction involving the distribution of the securities ofan issuer to the security holders of another person in connectionwith a merger, consolidation, exchange of securities, sale ofassets, or other reorganization to which the issuer, or its parentor subsidiary and the other person, or its parent or subsidiary,are parties.
(19) A rescission offer, sale, or purchase under IC 23-19-5-10.
(20) An offer or sale of a security to a person not a resident ofthis state and not present in this state if the offer or sale doesnot constitute a violation of the laws of the state or foreignjurisdiction in which the offeree or purchaser is present and isnot part of an unlawful plan or scheme to evade this article.
(21) Employees' stock purchase, savings, option, profit-sharing,pension, or similar employees' benefit plan, including anysecurities, plan interests, and guarantees issued under acompensatory benefit plan or compensation contract, containedin a record, established by the issuer, its parents, itsmajority-owned subsidiaries, or the majority-owned subsidiariesof the issuer's parent for the participation of their employeesincluding offers or sales of such securities to:
(A) directors; general partners; trustees, if the issuer is abusiness trust; officers; consultants; and advisers;
(B) family members who acquire such securities from thosepersons through gifts or domestic relations orders;
(C) former employees, directors, general partners, trustees,officers, consultants, and advisers if those individuals wereemployed by or providing services to the issuer when thesecurities were offered; and (D) insurance agents who are exclusive insurance agents ofthe issuer, or the issuer's subsidiaries or parents, or whoderive more than fifty percent (50%) of their annual incomefrom those organizations.
(22) A transaction involving:
(A) a stock dividend or equivalent equity distribution,whether the corporation or other business organizationdistributing the dividend or equivalent equity distribution isthe issuer or not, if nothing of value is given by stockholdersor other equity holders for the dividend or equivalent equitydistribution other than the surrender of a right to a cash orproperty dividend if each stockholder or other equity holdermay elect to take the dividend or equivalent equitydistribution in cash, property, or stock;
(B) an act incident to a judicially approved reorganization inwhich a security is issued in exchange for one (1) or moreoutstanding securities, claims, or property interests, or partlyin such exchange and partly for cash; or
(C) the solicitation of tenders of securities by an offeror ina tender offer in compliance with Rule 162 adopted underthe Securities Act of 1933 (17 CFR 230.162).
(23) A nonissuer transaction in an outstanding security by orthrough a broker-dealer registered or exempt from registrationunder this article, if the issuer is a reporting issuer in a foreignjurisdiction designated by this subdivision or by rule adopted ororder issued under this article; has been subject to continuousreporting requirements in the foreign jurisdiction for not lessthan one hundred eighty (180) days before the transaction; andthe security is listed on the foreign jurisdiction's securitiesexchange that has been designated by this subdivision or by ruleadopted or order issued under this article, or is a security of thesame issuer that is of senior or substantially equal rank to thelisted security or is a warrant or right to purchase or subscribeto any of the foregoing. For purposes of this subdivision,Canada, together with its provinces and territories, is adesignated foreign jurisdiction and The Toronto StockExchange, Inc., is a designated securities exchange. After anadministrative hearing in compliance with this article, thecommissioner, by rule adopted or order issued under this article,may revoke the designation of a securities exchange under thissubdivision, if the commissioner finds that revocation isnecessary or appropriate in the public interest and for theprotection of investors.
As added by P.L.27-2007, SEC.23.
IC 23-19-2-3
Additional exemptions; waivers
Sec. 3. A rule adopted or order issued under this article mayexempt a security, transaction, or offer; a rule under this article mayexempt a class of securities, transactions, or offers from any or all of
the requirements of IC 23-19-3-1 through IC 23-19-3-6 andIC 23-19-5-4; and an order under this article may waive, in whole orin part, any or all of the conditions for an exemption or offer undersections 1 and 2 of this chapter.
As added by P.L.27-2007, SEC.23.
IC 23-19-2-4
Denial, suspension, revocation, condition, or limitation ofexemptions; knowledge of order
Sec. 4. (a) Except with respect to a federal covered security or atransaction involving a federal covered security, an order under thisarticle may deny, suspend application of, condition, limit, or revokean exemption created under section 1(3)(C), (1)(7), 1(8), or 2 of thischapter or an exemption or waiver created under section 3 of thischapter with respect to a specific security, transaction, or offer. Anorder under this section may be issued only under the procedures inIC 23-19-3-6(d) or IC 23-19-6-4 and only prospectively.
(b) A person does not violate IC 23-19-3-1, IC 23-19-3-3 throughIC 23-19-3-6, IC 23-19-5-4, or IC 23-19-5-10 by an offer to sell, offerto purchase, sale, or purchase effected after the entry of an orderissued under this section if the person did not know, and in theexercise of reasonable care could not have known, of the order.
As added by P.L.27-2007, SEC.23.