409.2-202. Exempt transactions.
Exempt transactions.
409.2-202. The following transactions are exempt from therequirements of sections 409.3-301 to 409.3-306 and 409.5-504:
(1) An isolated nonissuer transaction, whether effected by or througha broker-dealer or not;
(2) A nonissuer transaction by or through a broker-dealer registered,or exempt from registration under this act, and a resale transaction by asponsor of a unit investment trust registered under the Investment CompanyAct of 1940, in a security of a class that has been outstanding in thehands of the public for at least ninety days, if, at the date of thetransaction:
(A) The issuer of the security is engaged in business, the issuer isnot in the organizational stage or in bankruptcy or receivership, and theissuer is not a blank check, blind pool, or shell company that has nospecific business plan or purpose or has indicated that its primarybusiness 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 currentmarket price;
(C) The security does not constitute the whole or part of an unsoldallotment to, or a subscription or participation by, the broker-dealer asan underwriter of the security or a redistribution; and
(D) A nationally recognized securities manual or its electronicequivalent designated by rule adopted or order issued under this act or arecord filed with the Securities and Exchange Commission that is publiclyavailable contains:
(i) A description of the business and operations of the issuer;
(ii) The names of the issuer's executive officers and the names ofthe issuer's directors, if any;
(iii) An audited balance sheet of the issuer as of a date withineighteen months before the date of the transaction or, in the case of areorganization or merger when the parties to the reorganization or mergereach had an audited balance sheet, a pro forma balance sheet for thecombined organization; and
(iv) An audited income statement for each of the issuer's twoimmediately previous fiscal years or for the period of existence of theissuer, whichever is shorter, or, in the case of a reorganization or mergerwhen each party to the reorganization or merger had audited incomestatements, a pro forma income statement; or
(E) The issuer of the security has a class of equity securitieslisted on a national securities exchange registered under the SecuritiesExchange Act of 1934 or designated for trading on the National Associationof Securities Dealers Automated Quotation System, unless the issuer of thesecurity is a unit investment trust registered under the Investment CompanyAct of 1940; or the issuer of the security, including its predecessors, hasbeen engaged in continuous business for at least three years; or the issuerof the security has total assets of at least two million dollars based onan audited balance sheet as of a date within eighteen months before thedate of the transaction or, in the case of a reorganization or merger whenthe parties to the reorganization or merger each had the audited balancesheet, a pro forma balance sheet for the combined organization;
(3) A nonissuer transaction by or through a broker-dealer registeredor exempt from registration under this act in a security of a foreignissuer that is a margin security defined in regulations or rules adopted bythe Board of Governors of the Federal Reserve System;
(4) A nonissuer transaction by or through a broker-dealer registeredor exempt from registration under this act in an outstanding security ifthe guarantor of the security files reports with the Securities andExchange Commission under the reporting requirements of Section 13 or 15(d)of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d));
(5) A nonissuer transaction by or through a broker-dealer registeredor exempt from registration under this act in a security that:
(A) Is rated at the time of the transaction by a nationallyrecognized statistical rating organization in one of its four highestrating 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 orwithin the three previous fiscal years or during the existence of theissuer and any predecessor if less than three fiscal years, in the paymentof principal, interest, or dividends on the security; and
(ii) The issuer is engaged in business, is not in the organizationalstage or in bankruptcy or receivership, and is not and has not been withinthe previous twelve months a blank check, blind pool, or shell company thathas no specific business plan or purpose or has indicated that its primarybusiness 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 registeredor exempt from registration under this act effecting an unsolicited orderor offer to purchase;
(7) A nonissuer transaction executed by a bona fide pledgee withoutthe purpose of evading this act;
(8) A nonissuer transaction by a federal covered investment adviserwith investments under management in excess of one hundred million dollarsacting in the exercise of discretionary authority in a signed record forthe account of others;
(9) A transaction in a security, whether or not the security ortransaction is otherwise exempt, in exchange for one or more bona fideoutstanding securities, claims, or property interests, or partly in suchexchange and partly for cash, if the terms and conditions of the issuanceand exchange or the delivery and exchange and the fairness of the terms andconditions have been approved by the commissioner after a hearing;
(10) A transaction between the issuer or other person on whose behalfthe offering is made and an underwriter, or among underwriters;
(11) A transaction in a note, bond, debenture, or other evidence ofindebtedness secured by a mortgage or other security agreement if:
(A) The note, bond, debenture, or other evidence of indebtedness isoffered and sold with the mortgage or other security agreement as a unit;
(B) A general solicitation or general advertisement of thetransaction is not made; and
(C) A commission or other remuneration is not paid or given, directlyor indirectly, to a person not registered under this act as a broker-dealeror as an agent;
(12) A transaction by an executor, commissioner of an estate,sheriff, marshal, receiver, trustee in bankruptcy, guardian, orconservator;
(13) A sale or offer to sell to:
(A) An institutional investor;
(B) A federal covered investment adviser; or
(C) Any other person exempted by rule adopted or order issued underthis act;
(14) A sale or an offer to sell securities of an issuer, if part of asingle issue in which:
(A) Not more than twenty-five purchasers are present in this stateduring any twelve consecutive months, other than those designated inparagraph (13);
(B) A general solicitation or general advertising is not made inconnection with the offer to sell or sale of the securities;
(C) A commission or other remuneration is not paid or given, directlyor indirectly, to a person other than a broker-dealer registered under thisact or an agent registered under this act for soliciting a prospectivepurchaser in this state; and
(D) The issuer reasonably believes that all the purchasers in thisstate, other than those designated in paragraph (13), are purchasing forinvestment;
(15) A transaction under an offer to existing security holders of theissuer, including persons that at the date of the transaction are holdersof convertible securities, options, or warrants, if a commission or otherremuneration, 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 fromregistration under the Securities Act of 1933 if:
(A) A registration or offering statement or similar record asrequired under the Securities Act of 1933 has been filed, but is noteffective, or the offer is made in compliance with Rule 165 adopted underthe Securities Act of 1933 (17 C.F.R. 230.165); and
(B) A stop order of which the offeror is aware has not been issuedagainst the offeror by the commissioner or the Securities and ExchangeCommission, and an audit, inspection, or proceeding that is public and thatmay 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 fromregistration under the Securities Act of 1933 if:
(A) A registration statement has been filed under this act, but isnot effective;
(B) A solicitation of interest is provided in a record to offerees incompliance with a rule adopted by the commissioner under this act; and
(C) A stop order of which the offeror is aware has not been issued bythe commissioner under this act and an audit, inspection, or proceedingthat may culminate in a stop order is not known by the offeror to bepending;
(18) A transaction involving the distribution of the securities of anissuer to the security holders of another person in connection with amerger, consolidation, exchange of securities, sale of assets, or otherreorganization to which the issuer, or its parent or subsidiary and theother person, or its parent or subsidiary, are parties;
(19) A rescission offer, sale, or purchase under section 409.5-510;
(20) An offer or sale of a security to a person not a resident ofthis state and not present in this state if the offer or sale does notconstitute a violation of the laws of the state or foreign jurisdiction inwhich the offeree or purchaser is present and is not part of an unlawfulplan or scheme to evade this act;
(21) Employees' stock purchase, savings, option, profit-sharing,pension, or similar employees' benefit plan, including any securities, planinterests, and guarantees issued under a compensatory benefit plan orcompensation contract, contained in a record, established by the issuer,its parents, its majority-owned subsidiaries, or the majority-ownedsubsidiaries of the issuer's parent for the participation of theiremployees including offers or sales of such securities to:
(A) Directors; general partners; trustees, if the issuer is abusiness trust; officers; consultants; and advisors;
(B) Family members who acquire such securities from those personsthrough gifts or domestic relations orders;
(C) Former employees, directors, general partners, trustees,officers, consultants, and advisors if those individuals were employed byor providing services to the issuer when the securities were offered;
(D) Insurance agents who are exclusive insurance agents of theissuer, or the issuer's subsidiaries or parents, or who derive more thanfifty percent of their annual income from those organizations; and
(E) Current employees;
(22) A transaction involving:
(A) A stock dividend or equivalent equity distribution, whether thecorporation or other business organization distributing the dividend orequivalent equity distribution is the issuer or not, if nothing of value isgiven by stockholders or other equity holders for the dividend orequivalent equity distribution other than the surrender of a right to acash or property dividend if each stockholder or other equity holder mayelect to take the dividend or equivalent equity distribution in cash,property, or stock;
(B) An act incident to a judicially approved reorganization in whicha security is issued in exchange for one or more outstanding securities,claims, or property interests, or partly in such exchange and partly forcash; or
(C) The solicitation of tenders of securities by an offeror in atender offer in compliance with Rule 162 adopted under the Securities Actof 1933 (17 C.F.R. 230.162); or
(23) A nonissuer transaction in an outstanding security by or througha broker-dealer registered or exempt from registration under this act, ifthe issuer is a reporting issuer in a foreign jurisdiction designated bythis paragraph or by rule adopted or order issued under this act; has beensubject to continuous reporting requirements in the foreign jurisdictionfor not less than one hundred eighty days before the transaction; and thesecurity is listed on the foreign jurisdiction's securities exchange thathas been designated by this paragraph or by rule adopted or order issuedunder this act, or is a security of the same issuer that is of senior orsubstantially equal rank to the listed security or is a warrant or right topurchase or subscribe to any of the foregoing. For purposes of thisparagraph, Canada, together with its provinces and territories, is adesignated foreign jurisdiction and The Toronto Stock Exchange, Inc., is adesignated securities exchange. After an administrative hearing incompliance with chapter 536, RSMo, the commissioner, by rule adopted ororder issued under this act, may revoke the designation of a securitiesexchange under this paragraph, if the commissioner finds that revocation isnecessary or appropriate in the public interest and for the protection ofinvestors.
(L. 2003 H.B. 380, A.L. 2005 H.B. 678)