Iowa Adopts Amendments Implementing Notice Filings for Federal Crowdfunding and Regulation A Offerings

On October 11, 2017, the Iowa Insurance Division announced that it has adopted amendments to the Iowa Administrative Code, adding notice filing requirements for federal crowdfunding offerings and updates to the notice filing requirements for Regulation A, Tier 2 offerings.  In addition, the amendments adopt two policy statements published by the North American Securities Administrators Association (“NASAA”).  The amendments went into effect on November 15, 2017.

Under the amendments, an issuer who plans to make a crowdfunding offering under the federal Securities Act must file notice in Iowa if the issuer has its principal place of business in Iowa or plans to sell 50 percent or more of the total offering to residents of Iowa.  The issuer’s notice filing must include either a completed Uniform Notice of Federal Crowdfunding Offering form (“Form U-CF”) or a Uniform Consent to Service of Process form (“Form U2”).  The issuer must also pay a filing fee of $100.  If the issuer’s principal place of business is in Iowa, the notice filing must be completed as soon as the issuer files its initial Form C filing with the Securities and Exchange Commission.  If the issuer’s principal place of business is not in Iowa but Iowa residents have bought 50 percent or more of the offering’s total amount, the notice filing should be completed “when the issuer becomes aware that such purchases have met this threshold and in no event later than 30 days from the date of completion of the offering.”

The amendments also made updates to the notice filing requirements for issuers planning to make Regulation A, Tier 2 offerings in Iowa.  An issuer who plans to make a Regulation A, Tier 2 offering must make a notice filing at least 21 days before the initial sale in Iowa is made.  The notice filing must include either a completed Uniform Notice of Filing of Regulation A- Tier 2 Offering form or a Form U2.  The issuer must also pay a filing fee of $400.  To renew the notice filing each year, the issuer must file either a Uniform Notice of Filing of Regulation A- Tier 2 Offering form, a notice filing form stating “renewal,” or other document asking for renewal.  The issuer must also pay a renewal fee of $400.

The amendments also incorporated two NASAA policy statements.  Under the amendments, the Iowa Administrator of Securities may deny a security’s registration if the Administrator finds that the registration does not sufficiently comport with the NASAA Statement of Policy Regarding Promoters’ Equity Investment.  The Administrator of Securities may also deny a security’s registration if the Administrator finds that the registration does not sufficiently comport with the NASAA Statement of Policy Regarding Unequal Voting Rights.

The amendments also added some procedures regarding use of electronic offering documents and electronic signatures.  An issuer is permitted to distribute offering documents via the Internet or other electronic means by following certain procedures outlining the conditions under which an electronic document or electronic signature can be used.  If an issuer wishes to allow the use of an electronic signature, the process that the issuer uses must comply with the Electronic Signatures in Global and National Commerce Act and the Uniform Electronic Transfers Act.

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