Securities are regulated at the federal level as well as by the states, so when selling securities you need to be aware of both state and federal laws. Like Oregon securities law, federal securities law requires most investment securities to be registered before they can be offered or sold. And, like Oregon law, the federal securities law creates certain exemptions from registration if the issuer follows all the terms of the exemption.
Section 3(a)(11) of the Securities Act of 1933 is an exemption to the securities registration requirements under the federal securities law for securities offered or sold only within a state to residents of that state (i.e., an “intrastate” offering). This is why the crowdfunding exemption in Oregon is only available to Oregon residents. The Securities and Exchange Commission (“SEC”) adopted Rule 147, which provides a non-exclusive safe harbor under Section 3(a)(11).
Until recently Section 3(a)(11) was the intrastate exemption from securities registration. In June of 2017 the SEC adopted a new rule: 147A. The SEC found that that the intrastate exemption needed to be modernized, but that Section 3(a)(11) didn’t provide the leeway necessary to address modern communications tools. The SEC adopted Rule 147A under its general authority to create exemptions. In July 2017, the Division adopted rules to allow businesses to use the new 147A for the Oregon Intrastate Offering exemption. This opened up the ability to advertise – but not sell- OIO securities to non-Oregonians. Businesses are still required to be residents of Oregon, but 147A expanded what Oregon residency means.
Under Rule 147A, an Oregon business is a “resident and doing business” in Oregon if one of the following apply:
Oregon’s Intrastate Offering Exemption was designed to promote compliance with the federal Securities Act and 147A. Because of the federal requirements, strict compliance with the state rules is important.