TO AMEND THE ARKANSAS SECURITIES ACT; AND TO CLARIFY EXEMPT TRANSACTIONS UNDER THE ARKANSAS SECURITIES ACT.

Arkansas businesses gain investment options with limits

The law gives qualifying Arkansas businesses a way to sell investments without registering the securities. Businesses must be for-profit, formed under Arkansas law, registered with the state, and based in Arkansas. Buyers must be Arkansas residents when they purchase. Offerings must meet federal intrastate rules, using the versions in effect on January 1, 2025. The offering cap is $10 million minus money received from the issuer's securities sales during the prior 12 months. That period runs back from the first offer or sale using this exemption. Each nonaccredited buyer can invest up to $100,000 per offering; accredited investors are not subject to that limit. Nonaccredited close family members sharing a primary home count as one buyer. Businesses must file proof of exemption at least 10 days before sales and pay a $100 fee. The filing must identify the business, people handling sales, deposit bank, and offering documents. Inaccurate filing information must be amended within 60 days. Investor money must go into a bank authorized to operate in Arkansas and be used as promised. Buyers must receive notice that the securities are unregistered and subject to federal resale limits. Resale requires registration or another exemption, which can limit access to invested money. Paid sales intermediaries must be state-registered brokers or agents, or FINRA-registered funding portals. Investment companies, issuers subject to specified federal reporting duties, and issuers with federal disqualifying events cannot use the exemption. It also excludes blind pools and companies with specified shortcomings in operations, business plans, investment goals, or merger plans. Businesses cannot combine this exemption with others except for institutional investors and sales to people who control the business. Controlling-person sales do not count toward the monetary limit. Arkansas antifraud rules still apply, and the Securities Commissioner can add conditions, regulate, or withdraw the exemption.