2006 Minnesota Statutes

80A.46 SECTION 202; EXEMPT TRANSACTIONS.
    The following transactions are exempt from the requirements of sections 80A.49 through
80A.54 and 80A.71:
    (1) isolated nonissuer transactions, consisting of sale to not more than ten purchasers
in Minnesota during any period of 12 consecutive months, whether effected by or through a
broker-dealer or not;
    (2) a nonissuer transaction by or through a broker-dealer registered, or exempt from
registration under this chapter, and a resale transaction by a sponsor of a unit investment trust
registered under the Investment Company Act of 1940, in a security of a class that has been
outstanding in the hands of the public for at least 90 days, if, at the date of the transaction:
    (A) the issuer of the security is engaged in business, the issuer is not in the organizational
stage or in bankruptcy or receivership, and the issuer is not a blank check, blind pool, or shell
company that has no specific business plan or purpose or has indicated that its primary business
plan is to engage in a merger or combination of the business with, or an acquisition of, an
unidentified person;
    (B) the security is sold at a price reasonably related to its current market price;
    (C) the security does not constitute the whole or part of an unsold allotment to, or a
subscription or participation by, the broker-dealer as an underwriter of the security or a
redistribution;
    (D) a nationally recognized securities manual or its electronic equivalent designated by rule
adopted or order issued under this chapter or a record filed with the Securities and Exchange
Commission that is publicly available contains:
    (i) a description of the business and operations of the issuer;
    (ii) the names of the issuer's executive officers and the names of the issuer's directors, if any;
    (iii) an audited balance sheet of the issuer as of a date within 18 months before the date of the
transaction or, in the case of a reorganization or merger when the parties to the reorganization
or merger each had an audited balance sheet, a pro forma balance sheet for the combined
organization; and
    (iv) an audited income statement for each of the issuer's two immediately previous fiscal
years or for the period of existence of the issuer, whichever is shorter, or, in the case of a
reorganization or merger when each party to the reorganization or merger had audited income
statements, a pro forma income statement; and
    (E) any one of the following requirements is met:
    (i) the issuer of the security has a class of equity securities listed on a national securities
exchange registered under Section 6 of the Securities Exchange Act of 1934 or designated for
trading on the National Association of Securities Dealers Automated Quotation System;
    (ii) the issuer of the security is a unit investment trust registered under the Investment
Company Act of 1940;
    (iii) the issuer of the security, including its predecessors, has been engaged in continuous
business for at least three years; or
    (iv) the issuer of the security has total assets of at least $2,000,000 based on an audited
balance sheet as of a date within 18 months before the date of the transaction or, in the case of a
reorganization or merger when the parties to the reorganization or merger each had such an
audited balance sheet, a pro forma balance sheet for the combined organization;
    (3) a nonissuer transaction by or through a broker-dealer registered or exempt from
registration under this chapter in a security of a foreign issuer that is a margin security defined in
regulations or rules adopted by the Board of Governors of the Federal Reserve System;
    (4) a nonissuer transaction by or through a broker-dealer registered or exempt from
registration under this chapter in an outstanding security if the guarantor of the security files
reports with the Securities and Exchange Commission under the reporting requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. Sections 78m or 78o(d));
    (5) a nonissuer transaction by or through a broker-dealer registered or exempt from
registration under this chapter in a security that:
    (A) is rated at the time of the transaction by a nationally recognized statistical rating
organization in one of its four highest rating categories; or
    (B) has a fixed maturity or a fixed interest or dividend, if:
    (i) a default has not occurred during the current fiscal year or within the three previous fiscal
years or during the existence of the issuer and any predecessor if less than three fiscal years, in the
payment of principal, interest, or dividends on the security; and
    (ii) the issuer is engaged in business, is not in the organizational stage or in bankruptcy or
receivership, and is not and has not been within the previous 12 months a blank check, blind pool,
or shell company that has no specific business plan or purpose or has indicated that its primary
business plan is to engage in a merger or combination of the business with, or an acquisition
of, an unidentified person;
    (6) a nonissuer transaction by or through a broker-dealer registered or exempt from
registration under this chapter effecting an unsolicited order or offer to purchase;
    (7) a nonissuer transaction executed by a bona fide pledgee without the purpose of evading
this chapter;
    (8) a nonissuer transaction by a federal covered investment adviser with investments under
management in excess of $100,000,000 acting in the exercise of discretionary authority in a
signed record for the account of others;
    (9) a transaction in a security, whether or not the security or transaction is otherwise exempt,
in exchange for one or more bona fide outstanding securities, claims, or property interests, or
partly in such exchange and partly for cash, if the terms and conditions of the issuance and
exchange or the delivery and exchange and the fairness of the terms and conditions have been
approved by the administrator after a hearing;
    (10) a transaction between the issuer or other person on whose behalf the offering is made
and an underwriter, or among underwriters;
    (11) a transaction in a note, bond, debenture, or other evidence of indebtedness secured
by a mortgage or other security agreement if:
    (A) the note, bond, debenture, or other evidence of indebtedness is offered and sold with the
mortgage or other security agreement as a unit;
    (B) a general solicitation or general advertisement of the transaction is not made; and
    (C) a commission or other remuneration is not paid or given, directly or indirectly, to a
person not registered under this chapter as a broker-dealer or as an agent;
    (12) a transaction by an executor, administrator of an estate, sheriff, marshal, receiver,
trustee in bankruptcy, guardian, or conservator;
    (13) a sale or offer to sell to:
    (A) an institutional investor;
    (B) an accredited investor as that term is defined in Regulation D, Rule 501(a);
    (C) a federal covered investment adviser; or
    (D) any other person exempted by rule adopted or order issued under this chapter;
    (14) a sale or an offer to sell securities by an issuer, if the transaction is part of a single
issue in which:
    (A) not more than 35 purchasers are present in this state during any 12 consecutive months,
other than those designated in paragraph (13);
    (B) a general solicitation or general advertising is not made in connection with the offer to
sell or sale of the securities;
    (C) a commission or other remuneration is not paid or given, directly or indirectly, to a
person other than a broker-dealer registered under this chapter or an agent registered under this
chapter for soliciting a prospective purchaser in this state; and
    (D) the issuer reasonably believes that all the purchasers in this state, other than those
designated in paragraph (13), are purchasing for investment;
    (15) a transaction under an offer to existing security holders of the issuer, including persons
that at the date of the transaction are holders of convertible securities, options, or warrants, if a
commission or other remuneration, other than a standby commission, is not paid or given, directly
or indirectly, for soliciting a security holder in this state;
    (16) an offer to sell, but not a sale, of a security not exempt from registration under the
Securities Act of 1933 if:
    (A) a registration or offering statement or similar record as required under the Securities
Act of 1933 has been filed, but is not effective, or the offer is made in compliance with Rule 165
adopted under the Securities Act of 1933 (17 C.F.R. 230.165); and
    (B) a stop order of which the offeror is aware has not been issued against the offeror by the
administrator or the Securities and Exchange Commission, and an audit, inspection, or proceeding
that is public and that may culminate in a stop order is not known by the offeror to be pending;
    (17) an offer to sell, but not a sale, of a security exempt from registration under the Securities
Act of 1933 if:
    (A) a registration statement has been filed under this chapter, but is not effective;
    (B) a solicitation of interest is provided in a record to offerees in compliance with a rule
adopted by the administrator under this chapter; and
    (C) a stop order of which the offeror is aware has not been issued by the administrator under
this chapter and an audit, inspection, or proceeding that may culminate in a stop order is not
known by the offeror to be pending;
    (18) a transaction involving the distribution of the securities of an issuer to the security
holders of another person in connection with a merger, consolidation, exchange of securities, sale
of assets, or other reorganization to which the issuer, or its parent or subsidiary and the other
person, or its parent or subsidiary, are parties;
    (19) a rescission offer, sale, or purchase under section 80A.77;
    (20) an offer or sale of a security to a person not a resident of this state and not present in
this state if the offer or sale does not constitute a violation of the laws of the state or foreign
jurisdiction in which the offeree or purchaser is present and is not part of an unlawful plan or
scheme to evade this chapter;
    (21) employees' stock purchase, savings, option, profit-sharing, pension, or similar
employees' benefit plan, including any securities, plan interests, and guarantees issued under a
compensatory benefit plan or compensation contract, contained in a record, established by the
issuer, its parents, its majority-owned subsidiaries, or the majority-owned subsidiaries of the
issuer's parent for the participation of their employees including offers or sales of such securities
to:
    (A) directors; general partners; trustees, if the issuer is a business trust; officers; consultants;
and advisors;
    (B) family members who acquire such securities from those persons through gifts or
domestic relations orders;
    (C) former employees, directors, general partners, trustees, officers, consultants, and
advisors if those individuals were employed by or providing services to the issuer when the
securities were offered; and
    (D) insurance agents who are exclusive insurance agents of the issuer, or the issuer's
subsidiaries or parents, or who derive more than 50 percent of their annual income from those
organizations;
    (22) a transaction involving:
    (A) a stock dividend or equivalent equity distribution, whether the corporation or other
business organization distributing the dividend or equivalent equity distribution is the issuer
or not, if nothing of value is given by stockholders or other equity holders for the dividend or
equivalent equity distribution other than the surrender of a right to a cash or property dividend
if each stockholder or other equity holder may elect to take the dividend or equivalent equity
distribution in cash, property, or stock;
    (B) an act incident to a judicially approved reorganization in which a security is issued in
exchange for one or more outstanding securities, claims, or property interests, or partly in such
exchange and partly for cash; or
    (C) the solicitation of tenders of securities by an offeror in a tender offer in compliance with
Rule 162 adopted under the Securities Act of 1933 (17 C.F.R. 230.162);
    (23) a nonissuer transaction in an outstanding security by or through a broker-dealer
registered or exempt from registration under this chapter, if the issuer is a reporting issuer in a
foreign jurisdiction designated by this paragraph or by rule adopted or order issued under this
chapter; has been subject to continuous reporting requirements in the foreign jurisdiction for not
less than 180 days before the transaction; and the security is listed on the foreign jurisdiction's
securities exchange that has been designated by this paragraph or by rule adopted or order issued
under this chapter, or is a security of the same issuer that is of senior or substantially equal rank to
the listed security or is a warrant or right to purchase or subscribe to any of the foregoing. For
purposes of this paragraph, Canada, together with its provinces and territories, is a designated
foreign jurisdiction and The Toronto Stock Exchange, Inc., is a designated securities exchange.
After an administrative hearing in compliance with chapter 14, the administrator, by rule adopted
or order issued under this chapter, may revoke the designation of a securities exchange under
this paragraph, if the administrator finds that revocation is necessary or appropriate in the public
interest and for the protection of investors;
    (24) any transaction effected by or through a Canadian broker-dealer exempted from
broker-dealer registration pursuant to section 80A.56(b)(3); or
    (25)(A) the offer and sale by a cooperative organized under chapter 308A, or under the laws
of another state, of its securities when the securities are offered and sold only to its members, or
when the purchase of the securities is necessary or incidental to establishing membership in the
cooperative, or when the securities are issued as patronage dividends. This paragraph applies to a
cooperative organized under the laws of another state only if the cooperative has filed with the
administrator a consent to service of process under section 80A.88 and has, not less than ten days
before the issuance or delivery, furnished the administrator with a written general description of
the transaction and any other information that the administrator requires by rule or otherwise;
    (B) the offer and sale by a cooperative organized under chapter 308B of its securities when
the securities are offered and sold to its existing members or when the purchase of the securities
is necessary or incidental to establishing patron membership in the cooperative, or when such
securities are issued as patronage dividends. The administrator has the power to define "patron
membership" for purposes of this paragraph. This paragraph applies to securities, other than
securities issued as patronage dividends, only when:
    (i) the issuer, before the completion of the sale of the securities, provides each offeree or
purchaser disclosure materials that, to the extent material to an understanding of the issuer,
its business, and the securities being offered, substantially meet the disclosure conditions and
limitations found in rule 502(b) of Regulation D promulgated by the Securities and Exchange
Commission, Code of Federal Regulations, title 17, section 230.502; and
    (ii) within 15 days after the completion of the first sale in each offering completed in reliance
upon this exemption, the cooperative has filed with the administrator a consent to service of
process under section 80A.88 (or has previously filed such a consent), and has furnished the
administrator with a written general description of the transaction and any other information that
the administrator requires by rule or otherwise; and
(C) a cooperative may, at or about the same time as offers or sales are being completed in
reliance upon the exemptions from registration found in this subpart and as part of a common plan
of financing, offer or sell its securities in reliance upon any other exemption from registration
available under this chapter. The offer or sale of securities in reliance upon the exemptions found
in this subpart will not be considered or deemed a part of or be integrated with any offer or sale of
securities conducted by the cooperative in reliance upon any other exemption from registration
available under this chapter, nor will offers or sales of securities by the cooperative in reliance
upon any other exemption from registration available under this chapter be considered or deemed
a part of or be integrated with any offer or sale conducted by the cooperative in reliance upon
this paragraph.
History: 2006 c 196 art 1 s 7
NOTE: This section, as added by Laws 2006, chapter 196, article 1, section 7, is effective
August 1, 2007. Laws 2006, chapter 196, article 1, section 52.