TITLE 7. BANKING AND SECURITIES
PART 7. STATE SECURITIES BOARD
CHAPTER 109. TRANSACTIONS EXEMPT FROM REGISTRATION
7 TAC §§109.1 - 109.8, 109.11, 109.13, 109.14, 109.17
The State Securities Board (Board) proposed amendments to 7 TAC §§109.1 - 109.8, 109.11, 109.13, 109.14 and 109.17 in the March 29, 2024, issue of the Texas Register (49 TexReg 2021). Due to errors by the Texas Register, some of the text of the rules were published incorrectly. The correct text follows.
For 7 TAC §109.11(d):
(d) In lieu of the three requirements in subsections (a)-(c) of this section, the section 4005.023(b)(1) and (b)(2) [section 5.S(1)] guarantee requirements will be satisfied if the option is issued by a clearing corporation recognized by the State Securities Board as satisfying all the following standards.
For 7 TAC §109.13(a)(2):
(2) Limited Offering Exemptions. The term "Limited Offering Exemptions" refers to the two limited offering exemptions found in subsections (a)(1) and (a)(2) of §4005.012 of the Act. The term "Limited Offering Exemption (a)(1)" refers to the exemption in subsection (a)(1) of §4005.012 of the Act, and the term "Limited Offering Exemption (a)(2)" refers to the exemption in subsection (a)(2) of §4005.012 of the Act. [In determining who is a sophisticated investor at least the following factors should be considered.]
For 7 TAC §109.13(e):
(e) Other exemptions. The phrase "exempt under another provision of this subchapter [other provisions of this §5]" in §4005.012(b)(1) [§5.I(c)] means exempt under any provisions of the Act, other than the Limited Offering Exemption (a)(1) [§5.I(a)], and subsections (k) and (l) of this section.
For 7 TAC §109.13(g):
(g) Sales made under §4005.013 of the Act. [Compensatory or benefit plan sales.] Only the employer and its participating subsidiaries, parents, or subsidiaries of such parents, if any, may offer or sell securities in connection with the employee plan without registration as dealers. For purposes of §4005.013 of the Act [the Act, §5.I(b)], the term "issuer" includes a general partner of a limited partnership with respect to a security sold or distributed by such limited partnership in a transaction otherwise meeting the requirements of §4005.013 of the Act [§5.I(b) ]. An employee of the issuer or its participating subsidiary who aids in offering or selling such securities in connection with the plan is not required to be registered as an agent provided the employee meets all of the following conditions:
For 7 TAC §109.13(h):
(h) Section 4005.013 [Compensatory or benefit] plans for counting purposes. A noncontributory stock ownership plan or stock ownership trust that holds securities of the issuer for the benefit of the participants in that issuer’s plan shall be counted as one security holder under the Limited Offering Exemption (a)(1) [§5.I(a)]. Plan participants in such a stock ownership plan or trust will not be deemed security holders of the issuer for purposes of counting security holders under the Limited Offering Exemption (a)(1) [§5.I(a)] solely because of their participation in the plan or trust. However, participants receiving distributions of securities from the plan or trust will be deemed security holders of the issuer on receipt of securities of the issuer from the plan or trust.
For 7 TAC §109.13(l)(1):
(1) The sale is made, without the use of any public solicitation or advertisements, as set forth in subsection (a) and subsection (b) of this section to:
For 7 TAC §109.13(l)(7):
(7) This subsection may not be combined with either of the Limited Offering Exemptions [the Securities Act, §5.I(a) or §5.I(c)], or subsection (k) of this section to make sales to more than 35 unaccredited security holders during a 12-month period. Except for accredited investors who became security holders pursuant to this subsection, security holders who purchase in sales made in compliance with this subsection are included in the count of security holders under the Limited Offering Exemption (a)(1) [§5.I(a)] or purchasers under the Limited Offering Exemption (a)(2) [§5.I(c)], but this subsection may be used to exceed the numbers of security holders or purchasers allowed by such sections over an extended period of time.
For 7 TAC §109.13(l)(10):
(10) Accredited investor security holders who purchase in sales made under this exemption are not counted as security holders under the Limited Offering Exemption (a)(1) [§5.I(a)] or purchasers under the Limited Offering Exemption (a)(2) [§5.I(c)] in determining whether any other sales to other security holders or purchasers are exempt under the Private Offering Exemptions [§5.I]. That is to say, this exemption for sales to accredited investors is cumulative with and in addition to the Private Offering Exemptions [exemptions contained in §5.I], and sales made under paragraph (1)(B) of this subsection are not considered in determining whether sales made in reliance on the exemptions contained in the Private Offering Exemptions [§5.I] would be within the numerical limits on the number of security holders or purchasers contained in the Private Offering Exemptions [§5.I].
For 7 TAC §109.14(a):
(a) It is the intent of the State Securities Board that §109.13(a)-(c) and (j) of this title (relating to Limited Offering Exemptions) apply to transactions made pursuant to the Securities Act, §4005.021 [§5.Q], and that the terms defined in §109.13(a)-(c) and (j) of this title (relating to Limited Offering Exemptions) have the same meanings for purposes of §4005.021 [§5.Q ] as they do for exemptions set forth in §4005.012 and §4005.013 of the Securities Act[, §5.I].
For 7 TAC §109.14(c):
(c) In addition to sales made under the Securities Act, §4005.021 [§5.Q], the State Securities Board, pursuant to the Act, §4005.024 [§5.T], exempts from the registration requirements of the Act, Chapter 4003, Subchapters A, B, and C [§7], the sale of interests in and under oil, gas, and mining leases, fees, or titles, or contracts relating thereto (hereinafter called securities), by the owner itself, or by a registered dealer acting as agent for the owner, provided all of the conditions of §109.13(k) or (l) of this title (relating to Limited Offering Exemptions) are met. The purpose of this subsection is to provide a mechanism which will allow for sales of the securities listed herein to accredited investors where the conditions of §109.13(k) or (l) of this title (relating to Limited Offering Exemptions) are met.