Georgia Uniform Securities Act of 2008
On May 12, 2008, Georgia became the 15th state to adopt a securities regulation regime based upon the Uniform Securities Act of 2002 (which was created as a model act by the National Conference of Commissioners on Uniform State Law). The Georgia Uniform Securities Act of 2008 (the “Georgia Uniform Securities Act”), which became effective on July 1, 2009, modernizes Georgia’s securities laws by achieving greater coordination with the federal securities laws and a more uniform system of regulation.
The Georgia Uniform Securities Act replaces the Georgia Securities Act of 1973, which was repealed in its entirety. The following is a brief introduction of the more significant differences between the Acts.
Limited Offering Exemption: Section 10-5-9(13) of the Georgia Securities Act of 1973, known as the limited offering exemption, was one of the most commonly used exemptions for small companies. Under the Georgia Uniform Securities Act, the limited offering exemption can be found at Section 10-5-11(14). The new law and differs from prior law significantly in that it (1) eliminates the requirement that non-issuers place legends on security instruments and (2) no longer requires that each Georgia purchaser sign a statement declaring that the purchase is for investment purposes.
As in the prior law, Section 10-5-11(14) continues to prohibit general solicitations and allows a maximum of 15 Georgia purchasers. However, there is now a prohibition against commissions for solicitation-related activities and a requirement that sales and offers be part of a single issue.
Employee Benefit Plan Exemption: Under Section 10-5-9(7) of the Georgia Securities Act of 1973, securities transactions related to employee benefit plans were generally exempt from state registration requirements if the plan was limited to employees of the issuer or the issuer’s affiliation. Section 10-5-9(9) of the Georgia Uniform Securities Act significantly expands the exemption by allowing consultants and advisors to participate in stock option plans. In addition, the Georgia Uniform Securities Act now allows exemptions for employee benefit plans that require participants to pay to participate.
Professional Exemptions: Generally, the Georgia Securities Act requires that broker-dealers, agents, investment advisers and investment adviser representatives either register in Georgia or be exempt from registration prior to transacting business in Georgia. The Georgia Uniform Securities Act introduces several new exemptions for securities professionals. However, the most important for small businesses may be the newly added exemption which sets forth that an agent who only effects transactions for exempt broker-dealers is itself exempt from registration.
If you have any questions regarding the above change in securities laws, please call (404) 255-7400.
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