Oregon Securities Law Exemptions

**Note: These are some common or notable exemptions that are available under Oregon state law, this is not an exhaustive list of available exemptions**

Intrastate Offering (Community Public Offering)

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.

Requirements for the Exemption

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 (Rules 441-035-0090 and 441-035-0080).

Prospective investors must also be provided a written disclosure document that includes, among other things, information about the issuer and its management, a discussion about significant factors material to the offering, including what makes the offering risky, the total offering amount, how the proceeds of the sale will be used, any litigation or legal proceedings within the last five years, and any terms and conditions of the securities being offered (Rule 441-035-0120).

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 (Rules 441-035-0090 and 441-035-0080).

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 (Rules 441-035-0090 and 441-035-0170).

While the rules do not further restrict how the funds raised can be used, the issuer must use the proceeds from the sale of securities consistent with the intended use of the funds, as stated by the issuer in the disclosure document (Rules 441-035-0090 and  441-035-0120).

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. Additionally, the issuer must file a copy of the advertising materials with the Director at least 7 days prior to use (Rule 441-035-0130).

The rules also contain requirements specific to use of the Internet. For example, if the issuer is using its existing website, the issuer must segregate all information relating to the advertising, offer, or sale of the securities on a webpage that is separate from those accessible to the general public (Rule 441-035-0150). A 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. However, the platform must similarly 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 (Rule 441-035-0160).

Filing and Reporting Requirements

  • Notice Filing: Issuers using this exemption must file a notice and pay a $200 fee. The notice must include, among other things, a copy of the offering documents, copy of any proposed advertising materials, and the URL of the website if one will be used (Rule 441-035-0110)
  • Sales Report: An issuer must file a sales report with the Director no more than 30 calendar days after the expiration date of the offering (Rule 441–35-0200).
  • Ongoing Reporting: Issuers must provide reports to holders of securities issued under this exemption at least twice a year, and give a copy to the Department. The issuer must report the compensation of directors and the executive officer, and include an explanation and discussion of business operations and its financial condition (Rule 441-035-0200).

Resale Limitations

Securities sold under this exemption can not be resold for 9 months after purchase, unless they are sold back to the issuer or the sale has been registered (Rule 441-035-0100).

 

Renewable Energy Cooperative Corporations

Section 59.025 (12) of Oregon’s Revised Statutes (ORS) exempts renewable energy cooperative corporations from registering i) membership shares or ii) capital stock as securities, subject to certain requirements. 1 Section 59.025 (12) allows qualified renewable energy cooperative corporations to raise up to $1,500,000 per project from non-accredited investors that are part of a “well-defined community.” Such non-accredited investors can contribute no more than 10% of that person’s liquid net worth. Renewable energy cooperative corporations are required to provide two sets of disclosures covering i) general information about the cooperative corporation and ii) specific material information about the project. Renewable energy cooperatives may “engage in limited advertising” to prospective members by providing general information about the cooperative’s operating history and projects. “Engage in limited advertising” does not, however, include general solicitation or offering of investments in specific projects or in the sale of capital stock to the public.  

Renewable energy cooperative corporations are associations of persons organized as a cooperative corporation under ORS chapter 62, with the purpose of developing and operating facilities to generate electricity from renewable energy resources, including wind, waste, solar, geothermal, low emission non-toxic biomass, landfill gas and digester gas, wave, tidal and ocean thermal energy, and hydroelectric facilities outside protected areas.

  1. Sections 441-025-0120 through 441-025-0126 of Division 25 of Department of Consumer and Business Services, Division of Finance and Corporate Securities, Oregon Administrative Rules. Available at http://arcweb.sos.state.or.us/pages/rules/oars_400/oar_441/441_025.html.