Public Act 100-0507

HB3791 Enrolled LRB100 07306 JLS 21791 b

AN ACT concerning business.

Be it enacted by the People of the State of Illinois,

represented in the General Assembly:

Section 5. The Illinois Securities Law of 1953 is amended

by changing Sections 2.35, 4, and 8d as follows:

(815 ILCS 5/2.35)

Sec. 2.35. Qualified escrowee. "Qualified escrowee" means

a person, firm, partnership, association, corporation, or

other legal entity who: (a) falls under the definition of

"title insurance company" under, and pursuant to the terms and

requirements of, the Title Insurance Act, or is otherwise an

agent or affiliate of such title insurance company who is

approved by such title insurance company to act under this

Section and pursuant to the terms and requirements of the Title

Insurance Act, and which maintains at least one physical

business location within the State; (b) is certified as an

independent escrowee under, and pursuant to the terms and

requirements of, the Title Insurance Act; or (c) is a bank,

regulated trust company, savings bank, savings and loan

association, or credit union, registered broker-dealer, or law

firm which is authorized to do business in the State and which

maintains at least one physical business location within the

State.

(Source: P.A. 99-182, eff. 1-1-16.)

(815 ILCS 5/4) (from Ch. 121 1/2, par. 137.4)

Sec. 4. Exempt transactions. The provisions of Sections 2a,

5, 6 and 7 of this Act shall not apply to any of the following

transactions, except where otherwise specified in this Section

4:

A. Any offer or sale, whether through a dealer or

otherwise, of securities by a person who is not an issuer,

underwriter, dealer or controlling person in respect of

such securities, and who, being the bona fide owner of such

securities, disposes thereof for his or her own account;

provided, that such offer or sale is not made directly or

indirectly for the benefit of the issuer or of an

underwriter or controlling person.

B. Any offer, sale, issuance or exchange of securities

of the issuer to or with security holders of the issuer

except to or with persons who are security holders solely

by reason of holding transferable warrants, transferable

options, or similar transferable rights of the issuer, if

no commission or other remuneration is paid or given

directly or indirectly for or on account of the procuring

or soliciting of such sale or exchange (other than a fee

paid to underwriters based on their undertaking to purchase

any securities not purchased by security holders in

connection with such sale or exchange).

C. Any offer, sale or issuance of securities to any

corporation, bank, savings bank, savings institution,

savings and loan association, trust company, insurance

company, building and loan association, or dealer; to a

pension fund, pension trust, or employees' profit sharing

trust, other financial institution or institutional

investor, any government or political subdivision or

instrumentality thereof, whether the purchaser is acting

for itself or in some fiduciary capacity; to any

partnership or other association engaged as a substantial

part of its business or operations in purchasing or holding

securities; to any trust in respect of which a bank or

trust company is trustee or co-trustee; to any entity in

which at least 90% of the equity is owned by persons

described under subsection C, H, or S of this Section 4; to

any employee benefit plan within the meaning of Title I of

the Federal ERISA Act if (i) the investment decision is

made by a plan fiduciary as defined in Section 3(21) of the

Federal ERISA Act and such plan fiduciary is either a bank,

savings and loan association, insurance company,

registered investment adviser or an investment adviser

registered under the Federal 1940 Investment Advisers Act,

or (ii) the plan has total assets in excess of $5,000,000,

or (iii) in the case of a self-directed plan, investment

decisions are made solely by persons that are described

under subsection C, D, H or S of this Section 4; to any

plan established and maintained by, and for the benefit of

the employees of, any state or political subdivision or

agency or instrumentality thereof if such plan has total

assets in excess of $5,000,000; or to any organization

described in Section 501(c)(3) of the Internal Revenue Code

of 1986, any Massachusetts or similar business trust, or

any partnership, if such organization, trust, or

partnership has total assets in excess of $5,000,000.

D. The Secretary of State is granted authority to

create by rule or regulation a limited offering

transactional exemption that furthers the objectives of

compatibility with federal exemptions and uniformity among

the states. The Secretary of State shall prescribe by rule

or regulation the amount of the fee for filing any report

required under this subsection, but the fee shall not be

less than the minimum amount nor more than the maximum

amount established under Section 11a of this Act and shall

not be returnable in any event.

E. Any offer or sale of securities by an executor,

administrator, guardian, receiver or trustee in insolvency

or bankruptcy, or at any judicial sale, or at a public sale

by auction held at an advertised time and place, or the

offer or sale of securities in good faith and not for the

purpose of avoiding the provisions of this Act by a pledgee

of securities pledged for a bona fide debt.

F. Any offer or sale by a registered dealer, either as

principal or agent, of any securities (except face amount

certificate contracts and investment fund shares) at a

price reasonably related to the current market price of

such securities, provided:

(1) (a) the securities are issued and outstanding;

(b) the issuer is required to file reports pursuant

to Section 13 or Section 15(d) of the Federal 1934 Act

and has been subject to such requirements during the 90

day period immediately preceding the date of the offer

or sale, or is an issuer of a security covered by

Section 12(g)(2)(B) or (G) of the Federal 1934 Act;

(c) the dealer has a reasonable basis for believing

that the issuer is current in filing the reports

required to be filed at regular intervals pursuant to

the provisions of Section 13 or Section 15(d), as the

case may be, of the Federal 1934 Act, or in the case of

insurance companies exempted from Section 12(g) of the

Federal 1934 Act by subparagraph 12(g)(2)(G) thereof,

the annual statement referred to in Section

12(g)(2)(G)(i) of the Federal 1934 Act; and

(d) the dealer has in its records, and makes

reasonably available upon request to any person

expressing an interest in a proposed transaction in the

securities, the issuer's most recent annual report

filed pursuant to Section 13 or 15(d), as the case may

be, of the Federal 1934 Act or the annual statement in

the case of an insurance company exempted from Section

12(g) of the Federal 1934 Act by subparagraph

12(g)(2)(G) thereof, together with any other reports

required to be filed at regular intervals under the

Federal 1934 Act by the issuer after such annual report

or annual statement; provided that the making

available of such reports pursuant to this

subparagraph, unless otherwise represented, shall not

constitute a representation by the dealer that the

information is true and correct, but shall constitute a

representation by the dealer that the information is

reasonably current; or

(2) (a) prior to any offer or sale, an application for

the authorization thereof and a report as set forth

under sub-paragraph (d) of this paragraph (2) has been

filed by any registered dealer with and approved by the

Secretary of State pursuant to such rules and

regulations as the Secretary of State may prescribe;

(b) the Secretary of State shall have the power by

order to refuse to approve any application or report

filed pursuant to this paragraph (2) if

(i) the application or report does not comply

with the provisions of this paragraph (2), or

(ii) the offer or sale of such securities would

work or tend to work a fraud or deceit, or

(iii) the issuer or the applicant has violated

any of the provisions of this Act;

(c) each application and report filed pursuant to

this paragraph (2) shall be accompanied by a filing fee

and an examination fee in the amount established

pursuant to Section 11a of this Act, which shall not be

returnable in any event;

(d) there shall be submitted to the Secretary of

State no later than 120 days following the end of the

issuer's fiscal year, each year during the period of

the authorization, one copy of a report which shall

contain a balance sheet and income statement prepared

as of the issuer's most recent fiscal year end

certified by an independent certified public

accountant, together with such current information

concerning the securities and the issuer thereof as the

Secretary of State may prescribe by rule or regulation

or order;

(e) prior to any offer or sale of securities under

the provisions of this paragraph (2), each registered

dealer participating in the offer or sale of such

securities shall provide upon request of prospective

purchasers of such securities a copy of the most recent

report required under the provisions of sub-paragraph

(d) of this paragraph (2);

(f) approval of an application filed pursuant to

this paragraph (2) of subsection F shall expire 5 years

after the date of the granting of the approval, unless

said approval is sooner terminated by (1) suspension or

revocation by the Secretary of State in the same manner

as is provided for in subsections E, F and G of Section

11 of this Act, or (2) the applicant filing with the

Secretary of State an affidavit to the effect that (i)

the subject securities have become exempt under

Section 3 of this Act or (ii) the applicant no longer

is capable of acting as the applicant and stating the

reasons therefor or (iii) the applicant no longer

desires to act as the applicant. In the event of the

filing of an affidavit under either preceding

sub-division (ii) or (iii) the Secretary of State may

authorize a substitution of applicant upon the new

applicant executing the application as originally

filed. However, the aforementioned substituted

execution shall have no effect upon the previously

determined date of expiration of approval of the

application. Notwithstanding the provisions of this

subparagraph (f), approvals granted under this

paragraph (2) of subsection F prior to the effective

date of this Act shall be governed by the provisions of

this Act in effect on such date of approval; and

(g) no person shall be considered to have violated

Section 5 of this Act by reason of any offer or sale

effected in reliance upon an approval granted under

this paragraph (2) after a termination thereof under

the foregoing subparagraph (f) if official notice of

such termination has not been circulated generally to

dealers by the Secretary of State and if such person

sustains the burden of proof that he or she did not

know, and in the exercise of reasonable care, could not

have known, of the termination; or

(3) the securities, or securities of the same class,

are the subject of an existing registration under Section 5

of this Act.

The exemption provided in this subsection F shall apply

only if the offer or sale is made in good faith and not for the

purpose of avoiding any of the provisions of this Act, and only

if the offer or sale is not made for the direct or indirect

benefit of the issuer of the securities, or the controlling

person in respect of such issuer.

G. (1) Any offer, sale or issuance of a security, whether

to residents or to non-residents of this State, where:

(a) all sales of such security to residents of this

State (including the most recent such sale) within the

immediately preceding 12-month period have been made

to not more than 35 persons or have involved an

aggregate sales price of not more than $1,000,000;

(b) such security is not offered or sold by means

of any general advertising or general solicitation in

this State; and

(c) no commission, discount, or other remuneration

exceeding 20% of the sale price of such security, if

sold to a resident of this State, is paid or given

directly or indirectly for or on account of such sales.

(2) In computing the number of resident purchasers or

the aggregate sales price under paragraph (1) (a) above,

there shall be excluded any purchaser or dollar amount of

sales price, as the case may be, with respect to any

security which at the time of its sale was exempt under

Section 3 or was registered under Section 5, 6 or 7 or was

sold in a transaction exempt under other subsections of

this Section 4.

(3) A prospectus or preliminary prospectus with

respect to a security for which a registration statement is

pending or effective under the Federal 1933 Act shall not

be deemed to constitute general advertising or general

solicitation in this State as such terms are used in

paragraph (1) (b) above, provided that such prospectus or

preliminary prospectus has not been sent or otherwise

delivered to more than 150 residents of this State.

(4) The Secretary of State shall by rule or regulation

require the filing of a report or reports of sales made in

reliance upon the exemption provided by this subsection G

and prescribe the form of such report and the time within

which such report shall be filed. Such report shall set

forth the name and address of the issuer and of the

controlling person, if the sale was for the direct or

indirect benefit of such person, and any other information

deemed necessary by the Secretary of State to enforce

compliance with this subsection G. The Secretary of State

shall prescribe by rule or regulation the amount of the fee

for filing any such report, established pursuant to Section

11a of this Act, which shall not be returnable in any

event. The Secretary of State may impose, in such cases as

he or she may deem appropriate, a penalty for failure to

file any such report in a timely manner, but no such

penalty shall exceed an amount equal to five times the

filing fee. The contents of any such report or portion

thereof may be deemed confidential by the Secretary of

State by rule or order and if so deemed shall not be

disclosed to the public except by order of court or in

court proceedings. The failure to file any such report

shall not affect the availability of such exemption, but

such failure to file any such report shall constitute a

violation of subsection D of Section 12 of this Act,

subject to the penalties enumerated in Section 14 of this

Act. The civil remedies provided for in subsection A of

Section 13 of this Act and the civil remedies of rescission

and appointment of a receiver, conservator, ancillary

receiver or ancillary conservator provided for in

subsection F of Section 13 of this Act shall not be

available against any person by reason of the failure to

file any such report or on account of the contents of any

such report.

H. Any offer, sale or issuance of a security to an

accredited investor provided that such security is not

offered or sold by means of any general advertising or

general solicitation, except as otherwise permitted in

this Act.

I. Any offer, sale or issuance of securities to or for

the benefit of security holders of any person incident to a

vote by such security holders pursuant to such person's

organizational document or any applicable statute of the

jurisdiction of such person's organization, on a merger,

consolidation, reclassification of securities, or sale or

transfer of assets in consideration of or exchange for

securities of the same or another person.

J. Any offer, sale or issuance of securities in

exchange for one or more outstanding securities, claims or

property interests, or partly in such exchange and partly

for cash, where such offer, sale or issuance is incident to

a reorganization, recapitalization, readjustment,

composition or settlement of a claim, as approved by a

court of competent jurisdiction of the United States, or

any state.

K. Any offer, sale or issuance of securities for

patronage, or as patronage refunds, or in connection with

marketing agreements by cooperative associations organized

exclusively for agricultural, producer, marketing,

purchasing, or consumer purposes; and the sale of

subscriptions for or shares of stock of cooperative

associations organized exclusively for agricultural,

producer, marketing, purchasing, or consumer purposes, if

no commission or other remuneration is paid or given

directly or indirectly for or on account of such

subscription, sale or resale, and if any person does not

own beneficially more than 5% of the aggregate amount of

issued and outstanding capital stock of such cooperative

association.

L. Offers for sale or solicitations of offers to buy

(but not the acceptance thereof), of securities which are

the subject of a pending registration statement filed under

the Federal 1933 Act and which are the subject of a pending

application for registration under this Act.

M. Any offer or sale of preorganization subscriptions

for any securities prior to the incorporation,

organization or formation of any issuer under the laws of

the United States, or any state, or the issuance by such

issuer, after its incorporation, organization or

formation, of securities pursuant to such preorganization

subscriptions, provided the number of subscribers does not

exceed 25 and either (1) no commission or other

remuneration is paid or given directly or indirectly for or

on account of such sale or sales or issuance, or (2) if any

commission or other remuneration is paid or given directly

or indirectly for or on account of such sale or sales or

issuance, the securities are not offered or sold by any

means of general advertising or general solicitation in

this State.

N. The execution of orders for purchase of securities

by a registered salesperson and dealer, provided such

persons act as agent for the purchaser, have made no

solicitation of the order to purchase the securities, have

no direct interest in the sale or distribution of the

securities ordered, receive no commission, profit, or

other compensation other than the commissions involved in

the purchase and sale of the securities and deliver to the

purchaser written confirmation of the order which clearly

identifies the commissions paid to the registered dealer.

O. Any offer, sale or issuance of securities, other

than fractional undivided interests in an oil, gas or other

mineral lease, right or royalty, for the direct or indirect

benefit of the issuer thereof, or of a controlling person,

whether through a dealer (acting either as principal or

agent) or otherwise, if the securities sold, immediately

following the sale or sales, together with securities

already owned by the purchaser, would constitute 50% or

more of the equity interest of any one issuer, provided

that the number of purchasers is not more than 5 and

provided further that no commission, discount or other

remuneration exceeding 15% of the aggregate sale price of

the securities is paid or given directly or indirectly for

or on account of the sale or sales.

P. Any offer, sale or issuance of securities (except

face amount certificate contracts and investment fund

shares) issued by and representing an interest in an issuer

which is a business corporation incorporated under the laws

of this State, the purposes of which are to provide capital

and supervision solely for the redevelopment of blighted

urban areas located in a municipality in this State and

whose assets are located entirely within that

municipality, provided: (1) no commission, discount or

other remuneration is paid or given directly or indirectly

for or on account of the sale or sales of such securities;

(2) the aggregate amount of any securities of the issuer

owned of record or beneficially by any one person will not

exceed the lesser of $5,000 or 4% of the equity

capitalization of the issuer; (3) the officers and

directors of the corporation have been bona fide residents

of the municipality not less than 3 years immediately

preceding the effectiveness of the offering sheet for the

securities under this subsection P; and (4) the issuer

files with the Secretary of State an offering sheet

descriptive of the securities setting forth:

(a) the name and address of the issuer;

(b) the title and total amount of securities to be

offered;

(c) the price at which the securities are to be

offered; and

(d) such additional information as the Secretary

of State may prescribe by rule and regulation.

The Secretary of State shall within a reasonable time

examine the offering sheet so filed and, unless the

Secretary of State shall make a determination that the

offering sheet so filed does not conform to the

requirements of this subsection P, shall declare the

offering sheet to be effective, which offering sheet shall

continue effective for a period of 12 months from the date

it becomes effective. The fee for examining the offering

sheet shall be as established pursuant to Section 11a of

this Act, and shall not be returnable in any event. The

Secretary of State shall by rule or regulation require the

filing of a report or reports of sales made to residents of

this State in reliance upon the exemption provided by this

subsection P and prescribe the form of such report and the

time within which such report shall be filed. The Secretary

of State shall prescribe by rule or regulation the amount

of the fee for filing any such report, but such fee shall

not be less than the minimum amount nor more than the

maximum amount established pursuant to Section 11a of this

Act, and shall not be returnable in any event. The

Secretary of State may impose, in such cases as he or she

may deem appropriate, a penalty for failure to file any

such report in a timely manner, but no such penalty shall

exceed an amount equal to five times the filing fee. The

contents of any such report shall be deemed confidential

and shall not be disclosed to the public except by order of

court or in court proceedings. The failure to file any such

report shall not affect the availability of such exemption,

but such failure to file any such report shall constitute a

violation of subsection D of Section 12 of this Act,

subject to the penalties enumerated in Section 14 of this

Act. The civil remedies provided for in subsection A of

Section 13 of this Act and the civil remedies of rescission

and appointment of a receiver, conservator, ancillary

receiver or ancillary conservator provided for in

subsection F of Section 13 of this Act shall not be

available against any person by reason of the failure to

file any such report or on account of the contents of any

such report.

Q. Any isolated transaction, whether effected by a

dealer or not.

R. Any offer, sale or issuance of a security to any

person who purchases at least $150,000 of the securities

being offered, where the purchaser's total purchase price

does not, or it is reasonably believed by the person

relying upon this subsection R that said purchase price

does not, exceed 20 percent of the purchaser's net worth at

the time of sale, or if a natural person a joint net worth

with that person's spouse, for one or any combination of

the following: (i) cash, (ii) securities for which market

quotations are readily available, (iii) an unconditional

obligation to pay cash or securities for which quotations

are readily available, which obligation is to be discharged

within five years of the sale of the securities to the

purchaser, or (iv) the cancellation of any indebtedness

owed by the issuer to the purchaser; provided that such

security is not offered or sold by means of any general

advertising or general solicitation in this State.

S. Any offer, sale or issuance of a security to any

person who is, or who is reasonably believed by the person

relying upon this subsection S to be, a director, executive

officer, or general partner of the issuer of the securities

being offered or sold, or any director, executive officer,

or general partner of a general partner of that issuer. For

purposes of this subsection S, "executive officer" shall

mean the president, any vice president in charge of a

principal business unit, division or function (such as

sales, administration or finance), any other officer who

performs a policy making function, or any other person who

performs similar policy making functions for the issuer.

Executive officers of subsidiaries may be deemed executive

officers of the issuer if they perform such policy making

functions for the issuer.

A document being filed pursuant to this Section 4 shall

be deemed filed, and any fee paid pursuant to this Section

4 shall be deemed paid, upon the date of actual receipt

thereof by the Secretary of State.

T. An offer or sale of a security, by an issuer that is

organized and, as of the time of the offer and the time of

sale is , in good standing under the laws of the State of

Illinois and that is , made solely to persons or entities

that are, as of the time of the offer and time of sale,

residents of the State of Illinois, subject to the

following provided:

(1) The offering is made in compliance with the

requirements of meets all of the requirements of the

federal exemption for intrastate offerings provided in

Section 3(a)(11) of the Securities Act of 1933 (15

U.S.C. 77c(a)(11)) and Rule 147 adopted under the

Securities Act of 1933 (17 CFR 230.147), Rule 147A (17

CFR 230.147A), or any other federal exemption

providing for intrastate offerings from time to time in

effect.

(2) The aggregate purchase price of all securities

sold by an issuer in reliance on the exemption under

this subsection, within any 12-month period, does not

exceed: (i) $1,000,000; or (ii) $4,000,000 if the

issuer has undergone and made available (directly, or

through a registered Internet portal), to each

prospective purchaser and the Secretary of State,

copies of its most recent financial statements which

have been audited by an independent auditor and

certified by a senior officer of the issuer as fairly,

completely, and accurately presenting the financial

condition of the issuer, in all material respects, as

of the dates indicated therein. Amounts received in

connection with any offer or sale to any accredited

investor or any of the following shall not count toward

the calculation of the foregoing monetary limitations:

(a) any entity (including, without limitation,

any trust) in which all of the equity interests are

owned by (or with respect to any trust, the primary

beneficiaries are) persons who are accredited

investors or who meet one or more of the criteria

in subparagraphs (b) through (d) of this paragraph

(2);

(b) with respect to participating in an

offering of a particular issuer, a natural person

serving as an officer, director, partner, or

trustee of, or otherwise occupying similar status

or performing similar functions with respect to,

such issuer;

(c) with respect to participating in an

offering of a particular issuer, a natural person

or entity who owns 10% or more of the then

aggregate outstanding voting capital securities of

such issuer; or

(d) such other person or entity as the

Secretary of State may hereafter exempt by rule.

The Secretary of State may hereafter cumulatively

increase the dollar limitations provided in this

paragraph (2).

(3) The aggregate amount sold by an issuer to any

purchaser (other than an accredited investor or a

person or entity which meets one or more of the

criteria in subparagraphs (a) through (d) of paragraph

(2) of this subsection T) in an offering of securities

made in reliance on the exemption provided in this

subsection T, within any consecutive 12-month period,

does not exceed $5,000.

(4) The Secretary of State shall establish by rule

the duties of the issuer including disclosure and

filing requirements, treatment of escrow funds and

agreements, production of financial statements, and

other requirements as deemed necessary.

(5) The issuer has made available, to each

prospective purchaser and the Secretary of State,

copies of its most recent financial statements

personally certified by one or more senior officers of

the issuer as fairly, completely, and accurately

presenting the financial condition of the issuer, in

all material respects, as of the dates indicated

therein.

(6) No commission or other remuneration is paid or

given directly or indirectly to any person or entity

(including, without limitation, any registered

Internet portal) for soliciting any investor, other

than such payments made person in this State, except to

registered dealers and registered salespersons

licensed in this State and such finder fees and other

payments now or hereafter permitted under applicable

Federal law or a United States Securities and Exchange

Commission rule or interpretive letter.

(7) Not less than 15 days before the earlier of the

first sale of securities made in reliance on the

exemption provided in this subsection T, or the use of

any general solicitation with respect thereto (other

than a general announcement made by or on behalf of),

an issuer shall file a notice filing with the Secretary

of State together with such other forms, materials, and

fees as required by the Secretary of State by rule.

The Secretary of State shall prescribe by rule the

amount of the fee for filing the notice filing required

under this subsection, but the fee shall not be less

than the minimum amount nor more than the maximum

amount in subparagraph (a), established under pursuant

to Section 11a of this Act and shall not be returnable

in any event. The Secretary of State may impose, in

such cases as the Secretary he or she may deem

appropriate, a penalty for failure to file any such

notice in a timely manner, but no such penalty shall

exceed an amount equal to 5 times the filing fee. The

contents of any such notice or portion thereof may be

deemed confidential by the Secretary of State by rule

or order and if so deemed shall not be disclosed to the

public except by order of court or in court

proceedings. The failure to file any such notice does

not affect the availability of such exemption, but such

failure to file any such report constitutes a violation

of subsection D of Section 12 of this Act and is

subject to the penalties and remedies available in this

Act and under the law.

(8) All payments for purchase of securities

offered pursuant to the exemption provided under this

subsection T are made directly to, and held by, a the

qualified escrowee identified in the escrow agreement

required pursuant to subparagraph (c) of paragraph

(4).

(9) The issuer includes each of the following in

one or more of the offering materials delivered to a

prospective purchaser, or to which a prospective

purchaser has been granted electronic access, in

connection with the offering:

(a) a description of the issuer, its type of

entity, the address, and telephone number of its

principal office;

(b) a reasonably detailed description of the

intended use of the offering proceeds, including

any amounts to be paid, as compensation or

otherwise, to any owner, executive officer,

director, managing member, or other person

occupying a similar status or performing similar

functions on behalf of the issuer;

(c) the identity of all persons owning more

than 20% 10% of the voting capital securities of

the issuer;

(d) the identity of the executive officers,

directors, managing members, and other persons

occupying a similar status or performing similar

functions in the name of and on behalf of the

issuer, including their titles and a reasonably

detailed description of their prior experience;

(e) the identity of any person or entity who

has been or will be retained by the issuer to

assist the issuer in conducting the offering and

sale of the securities (including all registered

Internet portals but excluding persons acting

solely as accountants or attorneys and employees

whose primary job responsibilities involve the

operating business of the issuer rather than

assisting the issuer in raising capital) and a

description of the consideration being paid to

each such person or entity for such assistance;

(e-5) to the extent the issuer is an affiliate

or related party of the registered Internet portal

being used to conduct the offering, a reasonably

detailed description of the relationship between

the parties;

(f) any additional information material to the

offering, including a description of significant

factors that make the offering speculative or

risky for the purchaser;

(g) (blank). the information required pursuant

to subparagraphs (a) and (b) of paragraph (4) of

this subsection T;

(h) such other information as the Secretary of

State may hereafter require by rule.

(10) The issuer (directly or through a registered

Internet portal) requires each purchaser to certify,

in writing or electronically, that the purchaser:

(a) is a resident of the State of Illinois;

(b) understands that the purchaser he or she is

investing in a high-risk, highly speculative,

business venture, that the purchaser he or she may

lose all of the his or her investment, and that the

purchaser that he or she can afford such a loss of

the his or her investment;

(c) understands that the securities being

offered are highly illiquid, that there is no ready

market for the sale of such securities, that it may

be difficult or impossible for purchaser to sell or

otherwise dispose of such securities, and (where

applicable) that purchaser may be required to hold

the securities for an indefinite period of time;

and

(d) understands that purchaser may be subject

to the payment of certain taxes with respect to the

securities being purchased whether or not

purchaser has sold, or otherwise disposed of, such

securities or whether purchaser has received any

distributions or other amounts from the issuer.

(11) The issuer (directly or through a registered

Internet portal) obtains from each purchaser of a

security offered under this subsection T evidence that

the purchaser is a resident of this State and, if

applicable, is an accredited investor. Without

limiting the generality of the foregoing, and not to

the exclusion of other reasonable methods which may be

used by the issuer in connection with the foregoing, an

issuer may rely on any evidence permitted under the

applicable Federal exemption relied upon pursuant to

paragraph (1) of this subsection T.

(12) The issuer (and to the extent a registered

Internet portal is used, such registered Internet

portal) maintains records of all offers and sales of

securities made pursuant to the exemption granted by

this subsection T and provides ready access to such

records to the Secretary of State, upon notice from the

Secretary of State.

(13) The issuer is not, either before or as a

result of the offering:

(a) an investment company, as defined in

Section 3 of the Investment Company Act of 1940 (15

U.S.C. 80a-3), as amended and in effect (unless the

issuer qualifies for exemption from the terms

thereof exclusion from such definition pursuant

to: one or more of the exceptions provided in

Section 3(c) of the Investment Company Act of

1940; , any other provision of the Investment

Company Act of 1940; , or any United States

Securities and Exchange Commission administrative

rule, regulation, or interpretive letter ruling

rule or regulation promulgated with respect to the

Investment Company Act of 1940 or in connection

therewith; or any other applicable Federal

regulation or exemption); or

(b) subject to the reporting requirements of

Section 13 or 15(d) of the Securities Exchange Act

of 1934 (15 U.S.C. 78m or 15 U.S.C. 78o(d).

(14) Neither the issuer, nor any person owning more

than 20% of the voting capital securities of the issuer

affiliated with the issuer (either before or as a

result of the offering), nor the offering itself, nor

the registered Internet portal (to the extent used) is

subject to disqualification established by the

Secretary of State by rule or contained in the

applicable Federal exemption relied upon pursuant to

paragraph (1) of this subsection T the Securities Act

of 1933 (15 U.S.C. 77c(a)(11)) and Rule 147 adopted

under the Securities Act of 1933 (17 CFR 230.147),

unless both of the following are met:

(a) on a showing of good cause and without

prejudice to any other action by the Secretary of

State, the Secretary of State determines that it is

not necessary under the circumstances that an

exemption is denied; and

(b) the issuer establishes that it made a

factual inquiry into whether any disqualification

existed under this paragraph (14), but did not

know, and in the exercise of reasonable care could

not have known, that a disqualification existed

under this paragraph (14); the nature and scope of

the requisite inquiry will vary based on the

circumstances of the issuer and the other offering

participants.

(15) A separate investment vehicle may be used to

aggregate investments in the offering being made by an

issuer under this Section provided that such separate

investment vehicle is permitted pursuant to Federal

law or the rules or an interpretive letter of the

United States Securities and Exchange Commission. The

Secretary shall adopt rules consistent with Federal

law, rules, or interpretive opinions regarding such

separate investment vehicles. For purposes of

determining compliance with the provisions of this

subsection T and the related administrative rules,

such investment vehicle shall be disregarded and the

subject offering shall be assessed as if the issuer had

made a direct offering to the participating investors.

Such separate investment vehicle shall not be

considered as an entity qualifying under subparagraph

(c) of paragraph (2) of this subsection T for purposes

of calculating the purchase price totals permitted

under the exemption. The Secretary of State may

establish by rule the duties of the separate investment

vehicle under this subsection including the production

of financial statements, maintenance of certain books

and records of the separate investment vehicle, and

other requirements as deemed necessary.

(Source: P.A. 99-182, eff. 1-1-16.)

(815 ILCS 5/8d)

Sec. 8d. Offerings made through registered Internet

portals.

(a) An issuer shall make an offering or sale of securities

pursuant to subsection T of Section 4 of this Act through the

use of one or more registered Internet portals.

(b) The Internet portal:

(1) shall be a registered broker-dealer under the

Securities Exchange Act of 1934 (15 U.S.C. 78o);

(2) shall be a funding portal registered under the

Securities Act of 1933 (15 U.S.C. 77d-1) and the Securities

and Exchange Commission has adopted rules under authority

of Section 3(h) of the Securities Exchange Act of 1934 (15

U.S.C. 78c) and Section 304 of the Jumpstart Our Business

Startups Act (P.L. 112-106) governing funding portals;

(3) shall be a dealer registered under this Act as of

the date of any offer or sale of securities made through

the Internet portal; or

(4) shall, to the extent it meets the qualifications

for exemption from registration pursuant to subsection (d)

of this Section:

(A) file, not later than 30 days before the date of

the first offer or sale of securities made within this

State, an application for registration (or renewal of

registration, as applicable) as a registered Internet

portal with the Secretary of State, in writing or in

electronic form as prescribed by the Secretary of

State, which the Secretary of State shall make

available as an electronic document on the Secretary of

State's Internet website, containing such information

and required deliveries as specified therein; and

(B) pay the application filing fee established

under Section 11a of this Act; the Secretary of State

shall, within a reasonable time, examine the filed

application and other materials filed and, approve or

deny the application.

(c) If any change occurs in the information submitted by,

or on behalf of, an Internet portal to the Secretary of State,

the Internet portal shall notify the Secretary of State within

10 days after such change occurs and shall provide the

Secretary of State with such additional information (if any)

requested by the Secretary of State in connection therewith.

(d) Notwithstanding anything contained in this Act to the

contrary, neither an Internet portal nor its owning or

operating entity is required to register as a dealer or an

investment advisor under this Act if each of the following

applies with respect to the Internet portal and its owning or

operating entity:

(1) It does not solicit purchases, sales, or offers to

buy the securities offered or displayed on the Internet

portal.

(2) It does not collect or hold funds in connection

with any purchase, sale, or offer to buy any securities

offered or displayed on the Internet portal.

(3) It does not compensate employees, agents, or other

persons for the solicitation or based on the sale of

securities displayed or referenced on the Internet portal.

(4) It is not compensated based on the amount of

securities sold.

(5) The fee it charges an issuer for an offering of

securities on the Internet portal is a fixed amount for

each offering, a variable amount based on the length of

time that the securities are offered on the Internet

portal, a variable amount based on the total proposed

offering amount, or any combination of such fixed and

variable amounts.

(6) It does not offer investment advice or

recommendations; however, an Internet portal is not deemed

to be offering investment advice or recommendations simply

by virtue of:

(A) selecting transactions in which the Internet

portal shall serve as an intermediary;

(B) establishing reasonable selection criteria for

an issuer to meet in order to establish an offer or

sale of securities through the Internet portal;

(C) establishing reasonable selection criteria for

a potential purchaser to meet in order to participate

in an offer or sale of securities made through the

Internet portal; or

(D) terminating an issuer transaction at any time

before the first sale of the securities of such issuer

if the Internet portal determines such action is

appropriate, after reasonable due diligence, to

protect potential purchasers, and the Internet portal

is able to direct the qualified escrowee to return all

funds then provided by potential purchasers, if any.

(7) It does not engage in such other activities as the

Secretary of State, by rule, determines are prohibited.

(e) Upon completion of an offering made pursuant to

subsection T of Section 4, each registered Internet portal

involved with the transactions (and the issuer, to the extent

applicable) shall store any and all electronic materials

related to the completed offering (including copies of all

offering documents, all offering materials, and all purchaser

information) on a secure, non-public, server or in such other

manner as the Secretary of State may hereafter deem acceptable

by rule.

(f) Notwithstanding anything contained in this Act to the

contrary, in connection with any offering or sale of securities

pursuant to subsection T of Section 4 of this Act, the hosting

registered Internet portal may elect, in its discretion, to

accept as compensation (in whole or part) for the services

provided in connection with the subject offering:

(1) such equity in, or other securities issued by,

issuer on the Internet portal as part of the subject

offering; or

(2) equity in, or other securities issued by, issuer of

any kind, provided that any right to distribution or

payment with respect to such class of equity or other

securities received by the registered Internet portal be

equal, or junior, in terms of priority to the distribution

and payment rights, as applicable, of the securities being

offered on the Internet portal as part of the subject

offering.

(Source: P.A. 99-182, eff. 1-1-16.)