Exemptions from Securities Registration

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This page provides general information about the exemptions from securities registration most commonly used by issuers who plan to offer a security for the purpose of raising capital in North Dakota. This information should not viewed as a substitute for competent legal counsel. An issuer should review the applicable state and federal securities statutes and rules for the specific requirements to qualify for an exemption or for registration. Exemptions covered here include:

Municipal Securities
NonProfit Organization
Limited Offeree
Limited Offering for North Dakota Issuers
Solicitation of Interest - "Test the Waters"
Incorporation Stage
Accredited Investor

As of November 10, 2021, all securities filings and filing fees are to be submitted electronically in accordance with the Revised Order Mandating Electronic Filings.  As indicated for each registration exemption below, filings and fee payments must be made either through the NASAA Electronic Filing Depository (EFD) or the ND Securities Filing Portal. Please send any inquiries regarding the Order and the electronic filing mandate to securitiesfilings@nd.gov .

Municipal Securities

The registration exemption pursuant to N.D.C.C. 10-04-05(1) does not include a municipal security with respect to the offer and sale in this state if the security is payable solely from a nongovernmental industrial or commercial enterprise, UNLESS such payments are made or unconditionally guaranteed by a person whose securities are exempt from registration, OR a notice filing is made with the Department.

Requirements:

Nonprofit Organization

This exemption provides for a filing and approval process for the offer and sale of a security issued by any person organized exclusively for religious, educational, benevolent, fraternal, charitable, social, or reformatory purposes.

Requirements:

  • N.D.C.C. 10-04-05(5)

  • Filing fee: $150.00, Non-refundable.

  • Form required: nonprofit organization claim of exemption - Form NP.

  • Exhibits required:

    1. Proof of current tax status under the Internal Revenue Code.

    2. Offering disclosure document.

    3. Consent to Service of Process - Form U-2

  • Approval is required prior to use of exemption.

  • The offering period is one year from the date of approval.

  • The offering may be renewed for a period of one year.

  • Renewal fee: $100.00, Non-refundable.

  • All filings and fee payments are made through the NASAA EFD.

Limited Offeree

Offers to sell a security may be made to not more than thirty-five persons who are residents of North Dakota. Certain institutional and accredited investors need not be counted for purposes in calculating the limit of offers. The issuer must reasonably believe that all buyers in this state are purchasing for investment, with the exception of institutional buyers. No commission or other remuneration is paid for soliciting any prospective buyer except to dealers and agents registered in North Dakota. The commissioner may withdraw or condition the exemption, or increase or decrease the number of offerees permitted, or waive the condition relating to the purchasing for investment purposes.

Requirements:

  • N.D.C.C. 10-04-06(9)(a)

  • Filing Fee: $150.00, Non-refundable.

  • Form Required: Limited Offeree Exemption Application - Form E.

  • Exhibits Required: Stated in Item 9 of the application.

  • Approval is required prior to use of exemption.

  • The offering period is twelve months from date of approval.

  • A final Sales Report is required within thirty days of the offering termination.

  • All filings and fee payments are made through the ND Securities Filing Portal.

Limited Offering for North Dakota Issuers

North Dakota companies may offer and sell up to five million dollars of common stock, preferred stock, limited liability company membership interests. The issuer must reasonably believe that all buyers in this state are purchasing for investment, with the exception of institutional buyers. No commission or other remuneration may be paid, except to dealers and agents registered in North Dakota. The commissioner may withdraw or condition this exemption, or waive the conditions for delivery of an offering disclosure document and the amount of an offering.

Requirements:

  • N.D.C.C. 10-04-06(9)(b)

  • The issuer is both organized and has its principal place of business in this state.

  • No public advertising or general solicitation except tombstone advertisements approved by commissioner may be used.

  • An offering disclosure document approved by the commissioner must be delivered to each offeree no less than seventy-two hours prior to the sale.

  • The gross offering proceeds may not exceed five million dollars.

  • All funds are placed in an escrow account until the total offering amount has been sold.

  • Filing Fee: $150.00, Non-refundable

  • Form Required: North Dakota Issuer Exemption Application - Form E(S)

  • Exhibits Required: Stated in Item 9 of the application

  • Approval is required prior to use of exemption.

  • The offering period is twelve months from date of approval.

  • A final Sales Report is required within thirty days of the offering termination.

  • Form for Escrow of Funds: Impoundment Agreement - Form S-9 

  • All filings and fee payments are made through the ND Securities Filing Portal.

Solicitations of Interest - "Test the Waters"

To use this exemption, the issuer must intend to either use an exemption from the registration requirements or register the securities offering in North Dakota. No security may be sold, no money can be accepted, and no commitment to purchase the security can be accepted from potential investors during the "test the waters" process. This exemption will permit a business to only solicit indications of interest from potential investors in a proposed securities offering.

Requirements:

  • N.D.C.C. 10-04-06(15)

  • An issuer must file a Solicitation of Interest form and copies of any advertising or marketing materials with the securities commissioner for approval at least ten business days before the issuer begins soliciting indications of interest from potential investors.

  • The issuer must file and obtain the approval of the commissioner for any amendments or changes in previously filed material.

  • The text of any published notice or script for broadcast, and any printed material delivered must include certain disclosures and information as stated in the Form SOI.

  • The issuer must stop all communications with prospective investors after filing an application to register or qualify the securities with the commissioner or with the Securities and Exchange Commission.

  • Filing Fee: None

  • Form Required: Solicitation of Interest Form - Form SOI

  • Exhibits Required: Any material to be used to conduct the solicitations of interest.

  • Approval is required prior to use of exemption.

  • The solicitation period is twelve months from date of approval.

  • All filings are made through the ND Securities Filing Portal.

Incorporation Stage

This exemption allows for the offer or sale of common stock, limited liability membership interests or limited partnership interests for the sole purpose of organization in North Dakota.

Requirements:

  • N.D.C.C. 10-04-06(16)

  • The number of purchasers may not exceed ten in number.

  • The offer or sale of the security is for the sole purpose of organization in this state.

  • The security may not be resold to others for a period of twelve months.

  • No advertising can be published or circulated.

  • All sales must be completed within ten days after the date of organization.

  • Filing Fee: None

  • The exemption is self-executing.
     

Accredited Investor

This exemption allows for the offer and sale of a security by an issuer to investors that meet the definition of an accredited investor.

Requirements:

  • N.D.C.C. 10-04-06(17)

  • Sales of the security are made only to persons who are or the issuer reasonably believes are accredited investors as defined in Regulation D, Rule 501, as promulgated by the Securities and Exchange Commission.

  • The exemption is not available to an issuer that is in the development stage or having no specific business plan or purpose.

  • The issuer reasonably believes all purchasers are purchasing for investment and will hold such security for at least twelve months.

  • With certain restrictions, a general announcement of the proposed offering may be made.

  • No telephone solicitation is permitted, unless the issuer reasonably believes the prospective purchaser is an accredited investor.

  • Filing Fee: $100.00, Non-refundable.

  • Late Filing Fee: $250.00 if the filing is not made within 15 days after the date of the first sale in the state, Non-refundable.

  • Forms required: Accredited Investor Exemption Notice of Transaction and Consent to Service of Process - Form U-2.

  • A copy of any general announcement.

  • All forms and materials must be filed within 15 days after the first sale in North Dakota.

  • All filings and fee payments are made through the ND Securities Filing Portal.

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Related Forms

  • Form MNF: Municipal Security Notice Filing

  • Form NP:   Nonprofit Organization Claim of Exemption

  • Form U-2:  Consent to Service of Process

  • Form E:  Limited Offeree Exemption Application

  • Form E (R):  Limited Offeree Exemption Final Report of Offers and Sales 

  • Form E (R) (S):  Issuer Exemption Final Report of Sales - Intrastate Limited Offering Exemption

  • Form E (S): North Dakota Issuer Exemption Application- Intrastate Limited Offering Exemption

  • Form S - 9:  Impoundment Agreement 

  • Form SOI:   Solicitation of Interest "Test the Waters" 

  • Form AIE:   Accredited Investor Exemption 

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Laws, Rules and Orders

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For Assistance Contact:

Candace Johnson, Securities Examiner / Investigator, Email Candace

Phone: (701) 328-2923