North Carolina Administrative Code

18 NCAC 06A .2039 FUNDING PORTAL STANDARDS OF CONDUCT (a) A funding portal and all persons associated with it shall: (1) observe high standards of commercial honor and just and equitable principles of trade in the conduct of its business; and (2) give particular attention to any …

18 NCAC 06A .2040 RESERVED FOR FUTURE CODIFICATION

18 NCAC 06A .2041 limitations on general solicitation and advertising An issuer relying on the Exemption and persons acting on behalf of the issuer may not engage in general solicitation or advertising, except as permitted by Rules .2043 and .2044 of this Section. History Note: A…

18 NCAC 06A .2042 MEDIA COVERAGE OF A SECURITIES OFFERING USING THE EXEMPTION Media coverage of a securities offering that has been prepared, authorized, approved, paid for, or provided other consideration for, by or on behalf of the issuer shall be deemed general solicitation or…

18 NCAC 06A .2043 Mandatory CONTENT requirement in permitted ADVERTISING NOTICE An advertising notice may advertise the issuer's securities offering only if the notice: (1) directs prospective investors to the platform (or website, if any) where the disclosure document is posted.…

18 NCAC 06A .2044 OTHER REQUIREMENTS FOR PERMITTED ADVERTISING NOTICES In addition to the content required by Rule .2043 of this Section, an advertising notice may include one or more of the following statements: (1) a statement that the issuer is conducting the securities offeri…

18 NCAC 06A .2045 ESTABLISHING A PLATFORM (a) A single public platform shall be established for every securities offering that shall: (1) provide a communication channel that facilitates the public sharing of information related to terms of the offering through a communication ch…

18 NCAC 06A .2046 INDIVIDUALS NOT SUBJECT TO DEALER REGISTRATION Officers, employees, associated independent contractors, and other persons of an issuer involved in the sale of the issuer's securities shall not be subject to registration as a dealer or salesman if they comply wit…

18 NCAC 06A .2047 RETENTION OF PLATFORM COMMUNICATIONS All communications through a communication channel on a platform shall be preserved for a period of six years after the filing of the Form NCE. History Note: Authority G.S. 78A-17.1(a)(5); 78A-17.1(f); 78A-49(a); 78A-49(d); 7…

18 NCAC 06A .2048 ADMINISTRATION OF PLATFORM COMMUNICATION CHANNELS (a) An issuer, funding portal or registered dealer administering a platform shall: (1) establish and enforce guidelines for communication using the communication channels; and (2) remove abusive or potentially fr…

18 NCAC 06A .2049 additional communication channel requirements An issuer and persons acting on behalf of the issuer may communicate with prospective investors and investors about the terms of the securities offering if: (1) effected through communication channels provided by the…

18 NCAC 06A .2050 RESERVED FOR FUTURE CODIFICATION

18 NCAC 06A .2051 PROVIDING Documents TO PROSPECTIVE INVESTORS AND INVESTORS The issuer shall provide a prospective investor or investor with the disclosure document that it filed with the Administrator at the time it makes an offer or sale of a security. History Note: Authority …

18 NCAC 06A .2052 MANNER OF PROVIDING DISCLOSURE AND OTHER DOCUMENTS TO A PROSPECTIVE INVESTOR OR AN INVESTOR (a) An individual or entity providing a disclosure document, notice, or other information to a prospective investor or investor pursuant to G.S. 78A-17.1 or this Section …

18 NCAC 06A .2053 ISSUER SHALL REQUIRE INVESTOR ACTIONS (a) Before selling a security to an investor, an issuer relying on the Exemption shall require the investor to provide the issuer with: (1) a signed, dated document identifying the investor and containing the certifications …

18 NCAC 06A .2054 INVESTOR CANCELLATION OF INVESTMENT COMMITMENT (a) Before an issuer has raised the minimum offering amount an investor may: (1) cancel the commitment to invest in the securities offering; and (2) request that the investor's funds be returned to the investor. (b)…

18 NCAC 06A .2055 RELEASE OF FUNDS IN ESCROW ACCOUNT (a) An escrow agent shall only release funds in the escrow account: (1) to the issuer if the minimum offering amount has been reached by the target date and the funds have been deposited in the escrow account; or (2) to an inve…

18 NCAC 06A .2056 ISSUER NOTICE TO INVESTORS MINIMUM OFFERING AMOUNT REACHED The issuer shall provide a written notification to all investors of the date when the minimum offering amount has been reached. The notification shall be provided within 10 days of the date when the mini…

18 NCAC 06A .2057 Quarterly Reports (a) The issuer shall provide quarterly reports to the investors and file the reports with the Administrator until no securities issued in the securities offering are outstanding. (b) The issuer's first quarterly report shall be due 45 days afte…

18 NCAC 06A .2058 CONCLUSION OF the offering The issuer shall file a report with the Administrator within 10 days of the conclusion of the securities offering. The report shall include: (1) the number of investors; (2) the aggregate amount of securities sold during the offering, …

18 NCAC 06A .2059 RESERVED FOR FUTURE CODIFICATION

18 NCAC 06A .2060 ISSUER RECORDKEEPING REQUIREMENTS (a) With regard to documents related to the Exemption, an issuer shall retain: (1) copies of documents that it makes; (2) copies of documents that it receives; and (3) documents of any persons acting on its behalf. The issuer sh…

18 NCAC 06A .2061 FUNDING PORTAL RECORDKEEPING REQUIREMENTS (a) The funding portal shall make and preserve the following: (1) all documents related to an investor who purchases or attempts to purchase securities through the funding portal; (2) all documents related to: (A) issuer…

18 NCAC 06A .2062 REQUIREMENT FOR RETENTION OF ORIGINAL OR EQUIVALENT With the exception of a registered dealer, a person subject to G.S. 78A-17.1 and the rules in this Section shall: (1) ensure that filed electronic documents include all meta-data or other information related to…

18 NCAC 06A .2063 PROTECTION OF INVESTORS AGAINST FRAUD AND OTHER MISCONDUCT An issuer relying on the Exemption shall not directly or indirectly engage in any activity that violates G.S. 78A-8 with regard to the issuer's offer or sale of securities. History Note: Authority G.S. 7…

18 NCAC 06A .2064 INTEGRATION (a) An issuer shall not use more than one exemption under G.S. 78A and this Section at the same time. (b) The Administrator shall coordinate the interpretation of other securities integration issues in a manner consistent with current principles in f…

18 NCAC 06A .2065 REQUEST FOR WAIVER (a) The Administrator may waive any rule in this Section other than Rule .2004(h) upon evaluation of a written request for a waiver and the factors set out in Rule .2066 of this Section. (b) A written request for a waiver shall include: (1) th…

18 NCAC 06A .2066 FACTORS ADMINISTRATOR MAY CONSIDER WITH REGARD TO WAIVER REQUESTS The Administrator may consider the following factors when considering whether to grant a waiver request: (1) the benefits to the particular investors and to the general investing public of complia…

18 NCAC 06A .2067 ADMINISTRATOR NOTICE OF APPROVAL OR DENIAL OF A WAIVER The Administrator shall notify the requestor in writing of: (1) its decision to consider the request for a waiver; or (2) of its approval or denial of the request for waiver. The Administrator shall send the…

18 NCAC 06A .2068 SIGNATURES Unless otherwise specified in G.S. 78A-17.1 or this Section, a form or document filed with the Administrator shall be signed by an officer of the entity authorized to sign for the entity. The officer's title or indication of the officer's authority to…

18 NCAC 06A .2069 ELECTRONIC SIGNATURE (a) Signers of documents electronically submitted to the Administrator in connection with a filing may use any form of electronic signature permissible according to G.S. 66-312(9) except that it shall not be a sound. (b) By electronically su…

18 NCAC 06A .2070 SIGNATURE VERIFIES INFORMATION IS TRUE A signature on a document submitted to the Administrator in connection with a filing shall be the signer's verification that the signer: (1) has read the form or document; and (2) knows that all information entered on the f…

18 NCAC 06A .2071 FILING WITH THE ADMINISTRATOR (a) A document may be filed with the Administrator: (1) electronically; (2) by hand delivery or by courier to the Secretary of State; or (3) by mail delivered to the Secretary of State. (b) A document that is filed electronically an…

18 NCAC 06A .2072 RESERVED FOR FUTURE CODIFICATION

18 NCAC 06A .2073 FILING ELECTRONICALLY (a) A form or document may be submitted electronically in connection with a filing by: (1) completing a fillable form on the Department's website at http://sosnc.gov/Sec/, when such a form becomes available on the website, and making any re…

18 NCAC 06A .2074 AMENDING A DOCUMENT FILED WITH THE ADMINISTRATOR A filing or other document may be amended by submitting to the Administrator: (1) a copy of the amended document with the amendments marked to show changes; and (2) a copy of an amended document without the change…

18 NCAC 06A .2075 ABANDONMENT OR WITHDRAWAL OF FILING (a) An issuer, escrow agent, funding portal, or registered dealer shall be deemed to have abandoned the filing if it fails to respond to a request for additional information from the Administrator more than 30 days after the d…

18 NCAC 06A .2076 CALCULATION OF TIME Unless a different time period is stated in this Section, time periods shall be calculated according to the provisions of G.S. 1A-1, Rule 6. History Note: Authority G.S. 78A-17.1(a)(5); 78A-17.1(f); 78A-49(a); 78A-49(d); 78A-64; S.L. 2016-103…

SECTION .2100 – RULES FOR LOCAL PUBLIC OFFERINGS (LPO) 18 NCAC 06A .2101 PURPOSE The purpose of the rules in this Section is to promote the overall economic health of North Carolina by: (1) facilitating responsible and competitive intrastate capital formation by North Carolina co…

18 NCAC 06A .2102 SCOPE (a) The rules in this Section shall apply to the offer and sale of securities by issuers conducting Local Public Offerings (LPOs). (b) The rules in Section .2000 of this Subchapter shall apply to securities offerings conducted pursuant to this Section unle…

18 NCAC 06A .2103 DEFINITIONS Except as otherwise provided, the following definitions apply to G.S. 78A-17.1 and this Section: (1) "Local Public Offering" or "LPO" means a securities offering that: (a) is conducted by an issuer relying on the Exemption; (b) is not using either a …

18 NCAC 06A .2104 LPO LIMITATIONS (a) An issuer conducting an LPO shall set a target offering amount that is not greater than two hundred fifty thousand dollars ($250,000). (b) An issuer conducting an LPO shall set a minimum offering amount that shall be no less than 25 percent o…

18 NCAC 06A .2105 MANDATORY CONFERENCE (a) An issuer offering or selling LPO securities shall contact the Securities Division to arrange and attend a conference with staff of the Division before advertising, offering, or selling securities. The contact may be made by either calli…

18 NCAC 06A .2106 FILING REQUIREMENTS FOR lpo (a) An issuer of an LPO shall comply with Rule .2007 of this Subchapter. (b) In lieu of the Form NCE required by Rule .2007 of this Subchapter, the issuer shall file a Form NC Claim of Exemption – LPO (Form NCE-LPO). History Note: Aut…

18 NCAC 06A .2107 CONTENTS OF FORM NCE-LPO (a) A Form NCE-LPO shall include: (1) all information required pursuant to Rule .2008 of this Subchapter; (2) all websites to be used by the issuer in connection with the LPO; (3) all social media accounts to be used by the issuer in con…

18 NCAC 06A .2108 ADDITIONAL LEGEND REQUIREMENT FOR DISCLOSURE DOCUMENT On the cover of its disclosure document, an issuer of an LPO shall include the following paragraph in the legend required by Rule .2011(b) of this Subchapter: "If you invest in this offering, you are investin…

18 NCAC 06A .2109 ESCROW PROVISIONS The issuer shall comply with the escrow provisions of Rules .2017 through .2028 of this Subchapter. History Note: Authority G.S. 78A-17.1(a)(5); 78A-17.1(f); 78A-49(a); 78A-49(d); 78A-64; S.L. 2016-103, s.4.(a); Eff. April 1, 2017 to expire on …

18 NCAC 06A .2110 OPTIONAL USE OF INTERNET BY AN ISSUER OF AN LPO (a) An issuer conducting an LPO may use the Internet to offer and sell its LPO securities but is not required to create a platform. "Platform" means a program or application accessible via the Internet or other sim…

18 NCAC 06A .2111 GENERAL SOLICITATION AND ADVERTISING FILING REQUIREMENTS (a) An issuer may use general solicitation or advertising in connection with an LPO if the issuer complies with Rules .2112 through .2114 of this Section. An issuer of an LPO shall be responsible for the a…

18 NCAC 06A .2112 GENERAL SOLICITATION AND ADVERTISING FOR WHICH FILING IS REQUIRED (a) No later than 10 business days before use, publication, or distribution, the issuer shall file with the Administrator copies of any advertisement, pamphlet, circular, form letter, pitch book, …