§ 78A-17. Exempt transactions. - North Carolina Statutes

§ 78A‑17.  Exempttransactions.

Except as otherwise providedin this Chapter, the following transactions are exempted from G.S. 78A‑24and G.S. 78A‑49(d):

(1)        Any isolatednonissuer transaction, whether effected through a dealer or not.

(2)        Any nonissuer distributionother than by a controlling person of an outstanding security if

a.         A recognizedsecurities manual contains the names of the issuer's officers and directors, abalance sheet of the issuer as of a date within 18 months, and a profit andloss statement for either the fiscal year preceding that date or the mostrecent year of operations, or

b.         A registered dealerfiles with the Administrator such information relating to the issuer as theAdministrator may by rule or order require, or

c.         The security has afixed maturity or a fixed interest or dividend provision and there has been nodefault during the current fiscal year or within the three preceding fiscalyears, or during the existence of the issuer and any predecessors if less thanthree years, in the payment of principal, interest, or dividends on thesecurity.

(3)        Any nonissuertransaction effected by or through a registered dealer pursuant to anunsolicited order or offer to buy; but the Administrator may by rule requirethat the customer acknowledge upon a specified form that the sale wasunsolicited, and that a signed copy of each such form be preserved by thedealer for a specified period.

(4)        Any transactionbetween the issuer or other person on whose behalf the offering is made and anunderwriter, or among underwriters.

(5)        Any transaction in abond or other evidence of indebtedness secured by a lien or security interestin real or personal property, or by an agreement for the sale of real estate orchattels, if the entire security interest or agreement, together with all thebonds or other evidences of indebtedness secured thereby, is offered and soldas a unit.

(6)        Any transaction byan executor, administrator, sheriff, marshal, receiver, trustee in bankruptcy,guardian, or conservator.

(7)        Any transactionexecuted by a person holding a bona fide security interest without any purposeof evading this Chapter.

(8)        Any offer or sale toan entity which has a net worth in excess of one million dollars ($1,000,000)as determined by generally accepted accounting principles, bank, savingsinstitution, trust company, insurance company, investment company as defined inthe Investment Company Act of 1940, pension or profit‑sharing trust, orother financial institution or institutional buyer, or to a dealer, whether thepurchaser is acting for itself or in some fiduciary capacity.

(9)        Any transactionpursuant to an offer directed by the offeror to not more than 25 persons, otherthan those persons designated in subdivision (8), in this State during any periodof 12 consecutive months, whether or not the offeror or any of the offerees isthen present in this State, if the seller reasonably believes that all thebuyers in this State are purchasing for investment. The Administrator may byrule or order withdraw, amend, or further condition this exemption for anysecurity or security transaction. There is established a fee of one hundredfifty dollars ($150.00) to recover costs for any filing required.

(10)      Any offer or sale ofa preorganizational certificate or subscription if: (i) no commission or otherremuneration is paid or given directly or indirectly for soliciting anyprospective subscriber; (ii) no public advertising or solicitation is used inconnection with the offer or sale; (iii) the number of subscribers does notexceed 10 and the number of offerees does not exceed 25; and (iv) no payment ismade by any subscriber.

(11)      Any transactionpursuant to an offer to existing security holders of the issuer, includingpersons who at the time of the transaction are holders of convertiblesecurities, nontransferable warrants, or transferable warrants exercisablewithin not more than 90 days of their issuance, if (i) no commission or otherremuneration (other than a standby commission) is paid or given directly orindirectly for soliciting any security holder in this State, or (ii) the issuerfirst files a notice specifying the terms of the offer and the Administratordoes not by order disallow the exemption within the next 10 full business days.

(12)      Any offer (but not asale) of a security for which registration statements have been filed underboth this Chapter and the Securities Act of 1933 if no stop order or refusalorder is in effect and no public proceeding or examination looking toward suchan order is pending under either act.

(13)      Any offer or sale bya domestic entity of its own securities if (i) the entity was organized for thepurpose of promoting community, agricultural or industrial development of thearea in which the principal office is located, (ii) the offer or sale has beenapproved by resolution of the county commissioners of the county in which itsprincipal office is located, and, if located in a municipality or within twomiles of the boundaries thereof, by resolution of the governing body of suchmunicipality, (iii) no commission or other remuneration is paid or givendirectly or indirectly for soliciting any prospective buyer in this State, and(iv) the entity is both organized and operated principally to promote somecommunity, industrial, or agricultural development that confers a publicbenefit rather than organized and operated principally to generate a pecuniaryprofit.

(14)      Any offer, sale orissuance of securities pursuant to an employees' stock or equity purchase,option, savings, pension, profit‑sharing, or other similar benefit planthat is exempt under the provisions of G.S. 78A‑16(11).

(15)      Any offer or sale oflimited partnership interests in a partnership organized under the NorthCarolina Uniform Limited Partnership Act for the sole purpose of constructing,owning and operating a low and moderate income rental housing project locatedin North Carolina if the total amount of the offering and the total number oflimited partners, both within and without this State for each such partnership,does not exceed five hundred thousand dollars ($500,000) and 100 respectively.This exemption shall be allowed without limitation as to (i) the number, eitherin total or within any time period, of separate partnerships which may beformed by the same general partner or partners, sponsors or individuals inwhich partnership interests are offered; (ii) the period over which suchofferings can be made; (iii) the amount of each limited partner's investment;or (iv) the period over which such investment is payable to the partnership.For purposes of this subdivision (15), the term "low and moderate rentalhousing project" means:

a.         Any housing projectwith respect to which a mortgage is insured or guaranteed under section221(d)(3) or 221(d)(4) or 236 of the National Housing Act, or any housingproject financed or assisted by direct loan, mortgage insurance or guaranty, ortax abatement under similar provisions of federal, State or local laws, whethernow existing or hereafter enacted; or

b.         Any housing project,some or all of the units of which are available for occupancy by families orindividuals eligible to receive subsidies under section 8 of the United StatesHousing Act of 1937, as amended, or under the provisions of other federal,State or local law authorizing similar levels of subsidy for lower incomefamilies, whether now existing or hereafter enacted; or

c.         Any housing projectwith respect to which a loan is made, insured or guaranteed under Title V,section 515, of the Housing Act of 1949, or under similar provisions of otherfederal, State or local laws, whether now existing or hereafter enacted.

(16)      Any offer to purchaseor to sell or any sale or issuance of a security, other than a security coveredunder federal law, pursuant to a plan approved by the Administrator after ahearing conducted pursuant to the provisions of G.S. 78A‑30 or anytransaction incident to any other judicially or governmentally approvedreorganization in which a security is issued in exchange for one or moreoutstanding securities, claims or property interests, or partly in suchexchange and partly cash.

(17)      Any transaction thatis exempt pursuant to rules established by the Administrator creating limitedoffering transactional exemptions that are consistent with the objectives ofcompatibility with federal limited offering exemptions and uniformity among thestates. There is established a fee of one hundred fifty dollars ($150.00) torecover costs for any filing required by such rules.

(18)      Any transactionincident to a class vote by security holders, pursuant to the articles ofincorporation or similar organizational document or the applicable statutegoverning the internal affairs of the entity, on a merger, conversion,consolidation, share exchange, reclassification of securities, or sale of anentity's assets in consideration of the issuance of securities of anotherentity.

(19)      Any offer or sale ofany viatical settlement contract or any fractionalized or pooled interesttherein by the issuer in a transaction that meets all of the followingcriteria:

a.         The underlyingviatical settlement transaction with the viator was not in violation of anyapplicable state or federal law; and

b.         The offer and saleof such contract or interest therein is conducted in accordance with suchconditions as the Administrator requires by rule or order, including conditionsgoverning advertising, suitability standards, financial statements, theinvestor's right of rescission, and the disclosure of information to offereesand purchasers.

TheAdministrator may establish a fee to recover costs for any filing required bysuch rules, not to exceed five hundred dollars ($500.00). (1925, c. 190, s. 4; 1927, c.149, s. 4; 1935, cc. 90, 154; 1955, c. 436, s. 3; 1959, c. 1185; 1967, c. 1233,ss. 2, 3; 1971, c. 572, s. 1; 1973, c. 1380; 1977, c. 162; c. 610, s. 1; 1979,c. 647, s. 1; 1981, c. 624, s. 2; 1981 (Reg. Sess., 1982), c. 1263, ss. 1, 2;1983, c. 509, ss. 1, 2; c. 817, ss. 6, 7; 1997‑419, s. 5; 2001‑197,s. 1; 2001‑201, ss. 8, 9, 10, 11, 12; 2001‑436, s. 8; 2002‑126,ss. 29A.22, 29A.23; 2004‑203, s. 6.)