In early 2015, the Oregon Department of Consumer and Business Services used its authority under Oregon Revised Statute Section 59.035(15) to establish the Oregon Intrastate Offering Exemption through the rulemaking process, which is commonly called the Community Public Offering (CPO). The CPO was the culmination of efforts of a team of people led by Amy Pearl of Hatch Innovation that began earlier in 2014. See this timeline for a breakdown of the events that led to the new administrative rules.
Just days after the rules became effective, Hatch Innovation helped launch the first 9 companies to use the new exemption, and also launched HatchOregon.com, a platform where Oregon residents can get more information about current community public offerings. If you are an Oregon resident you can see current offerings here.
The Key Elements of the CPO
To be eligible for this exemption, the issuer must be an existing Oregon business and have fewer than 50 employees. An offering under this exemption can be up to an aggregate of $250,000, but an issuer may not accept more than $2,500 from any individual investor. Offers and sales must be limited to natural persons who are residents of Oregon, and the offering must be conducted in accordance with the Federal Intrastate Exemption. The offering period can last for up to 12 months unless the issuer applies for an extension.
Business Technical Service Provider Requirement
To be eligible for the exemption, the issuer must also meet with a business technical service provider and have their business plan reviewed before advertising, offering, or selling securities under this exemption. A business technical service provider is defined as a Small Business Development Center, an Economic Development District, or a not-for-profit incubator, accelerator, or business resource provider approved by the Director.
Key Restrictions of the Exemption
This exemption has some restrictions. For example, the exemption is limited to offerings of notes, stocks, and debentures and is unavailable for offerings involving petroleum exploration or production, mining, or any other extractive industries
Advertising and Solicitation
Advertising and solicitation is permitted under this exemption, but with some conditions. Most notable is that an interested person must affirmatively declare that he or she is an Oregon resident before the person can view the advertising materials.
An internet based third-party platform provider, which can either be a business technical service provider or other entity approved by the Director, may be used to post advertising and offering documents. The platform must segregate the information relating to the securities offering separate from what is accessible to the general public, and may not solicit, sell, or effect transactions unless it is a registered broker-dealer. The rules also state that the platform may only charge a nominal flat fee for the upkeep of the website and may not take an interest in the issuer in exchange for use of the platform
Want More Information?
For more information on Oregon’s Community Public Offering, click here. You can also check out HatchOregon and Oregon’s Department of Consumer and Business Services.