On December 8, 2011, the Invest Georgia Exemption (aka “IGE”) was adopted by the Commissioner of Securities for the State of Georgia. The purpose of the IGE is to provide Georgia-based entrepreneurs with expanded access to capital by allowing entrepreneurs to issue debt and equity securities to accredited and non-accredited investors via general solicitation within the State of Georgia. The IGE takes advantage of a federal securities exemption that exempts securities registration requirements with respect to certain securities offerings conducted on an entirely intrastate basis (i.e., between issuers residing in, and doing business in, the same state as all of its investors). Below are the requirements for the IGE:
- Must meet federal intrastate offering exemption requirements.
- Issuer must be a for-profit business formed under Georgia law and registered with the Georgia Corporations Division.
- Must adhere to $5 million offering limit and cannot accept more than $10k from any non-accredited investor.
- All funds received must be deposited into a bank or depository institution authorized to do business in Georgia.
- All funds must be used as represented to investors.
- Issuer must file a notice BEFORE the use of any general solicitation or BEFORE the 25th private sale of a security.
- The issuer must inform all purchasers/investors that the securities have not been registered and are subject to resale limitations.
Under the IGE, an issuer must be a for-profit business entity formed under the laws of Georgia and registered with the Georgia Secretary of State. An issuer cannot be an investment company as defined in §3 of the federal Investment Company Act of 1940 or subject to the reporting requirements of §13 or §15(d) of the federal Securities Exchange Act of 1934 (In other words, the issuer cannot be a hedge fund, mutual fund or publicly traded/SEC-reporting company).
An issuer must file a notice with the Georgia Securities Division, electronically or via mail, BEFORE the use of any general solicitation or BEFORE the 25th private sale of a security; whichever comes first. Form GA-1 is the form that provides the notice for claiming the IGE and the information required by the IGE rule.
After an issuer files the required notice on Form GA-1 with the Georgia Securities Division, it is allowed to engage in general solicitation for its offering (i.e., advertising). “General solicitation” includes advertisements published in newspapers and magazines, public websites, communications broadcasted over television and radio, and seminars where attendees have been invited by general solicitation or general advertising. Internet portals may act as intermediates to facilitate an IGE offering.
Contact Davis Law if you have questions regarding equity crowdfunding in Georgia, or the Invest Georgia Exemption. Davis Law can be reached at 404.901.2500 and 770.922.8500, or send us a message from our website – Contact Davis Law.