Section 203.184. Offers and sales to principals

(a) Under the authority contained in section 203(r) of the act (70 P. S. § 1-203(r)), the Commission finds that it is not in the public interest or necessary for the protection of investors to require the registration under section 201 of the act (70 P. S. § 1-201) of securities offered and sold by an issuer to:

(1) A principal.

(2) A corporation, the outstanding voting stock of which is beneficially owned by one or more principals.

(3) A general partnership or a limited partnership, the interest in which is beneficially owned by one or more principals.

(4) A trust, the trustees of which are principals.

(5) Any other person, the interest in which is beneficially owned by one or more principals.

(b) For purposes of this section, the term ‘‘principal,’’ means the following:

(1) The chairperson, president, chief executive officer, general manager, chief operating officer, chief financial officer, vice president or other officer in charge of a principal business function (including sales, administration, finance, marketing, research and credit), secretary, treasurer, controller and any other natural person who performs similar functions, of one of the following:

(i) The issuer.

(ii) A wholly-owned subsidiary of the issuer.

(iii) A corporation, partnership or other entity which owns the voting stock or other voting equity interest of the issuer.

(iv) A corporation, partnership or other entity which serves as a general partner of the issuer.

(2) A director, general partner or comparable person charged by law with the management of one of the following:

(i) The issuer.

(ii) A wholly-owned subsidiary of the issuer.

(iii) A corporation, partnership or other entity which owns the voting stock or other voting equity interest of the issuer.

(iv) A corporation, partnership or other entity which serves as a general partner of the issuer.

(3) A beneficial owner of 10% or more of an outstanding class of voting stock or other voting equity interest of one of the following:

(i) The issuer.

(ii) A corporation, partnership or other entity which serves as a general partner of the issuer.

(4) A promoter of the issuer as defined in section 102(o) of the act (70 P. S. § 1-102(o)).

(5) A relative of a person specified in paragraphs (1)—(4). For purposes of this subsection, the term ‘‘relative’’ means one of the following:

(i) A spouse.

(ii) A parent.

(iii) A grandparent.

(iv) An aunt, uncle, child, child of a spouse, sibling, mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law or daughter-in-law.

(c) For purposes of this section, whether a person is a beneficial owner of a security or other interest will be determined in accordance with the Securities and Exchange Commission Rule 13d-3 (17 CFR 240.13d-3).

(d) The exemption set forth in this section is not applicable to any offer or sale to a person who has been appointed or elected a principal for the primary purpose of obtaining the exemption or to an offer or sale to a relative of this person. A person who is appointed or elected a principal in good faith for a purpose other than the purpose of obtaining the exemption set forth in this section to whom, or to whose relative, securities are sold without registration following the designation or election in reliance upon the exemption set forth in this section will not be deemed to have been designated or elected a principal for the primary purpose of obtaining the exemption set forth in this section.

The provisions of this § 203.184 adopted June 8, 1979, effective June 9, 1979, 9 Pa.B. 1807; amended September 25, 1992, effective September 26, 1992, 22 Pa.B. 4778; amended December 30, 1999, effective January 1, 2000, 30 Pa.B. 18; transferred and renumbered from 64 Pa. Code § 203.184, December 14, 2012, effective December 15, 2012, 42 Pa.B. 7533. Immediately preceding text appears at serial pages (324416) to (324418).

Notation

Authority

The provisions of this § 203.184 amended under sections 202(g) and (i), 203(d), (i.1), (j) and (n)—(t), 204(a), 205(b), 207(g), (j.1) and (n), 209(b), 211(a) and (b), 504(d), 513, 603(a), 606(d) and 609(a) of the Pennsylvania Securities Act of 1972 (70 P. S. § § 1-202(g) and (i), 1-203(d), (i.1), (j) and (n)—(t), 1-204(a), 1-205(b), 1-207(g), (j.1) and (n), 1-209(b), 1-211(a) and (b), 1-504(d), 1-513, 1-603(a), 1-606(d) and 1-609(a)).

Cross References

This section cited in 10 Pa. Code § 203.151 (relating to proxy statements).