--- name: intrastate-offering title: Intrastate Offering Compliance (Rule 147/147A) description: Produces a compliance memo and execution plan for U.S. intrastate securities offerings under Rule 147 or Rule 147A with state registration by qualification. Covers safe harbor selection, doing-business tests, residency verification, advertising controls, resale restrictions, integration analysis, and blue sky registration. Trigger when the user mentions intrastate offering, Rule 147, Rule 147A, registration by qualification, single-state offering, Section 3(a)(11), state-only fundraising, in-state investor requirements, resale restriction legends, or says "we're only raising in one state." author: CaseMark author_url: https://github.com/CaseMark/skills/tree/main/skills/legal/intrastate-offering license: Apache-2.0 version: 0.1.0 execution_mode: open jurisdiction: us practice: securities language: en --- # Intrastate Offering Compliance (Rule 147/147A) One out-of-state sale destroys the exemption — potentially retroactively for all investors. Unlike Rule 506, no NSMIA preemption exists; the issuer must also satisfy full state registration. This skill prevents the common failures: inadequate residency verification, uncontrolled advertising reach, failed doing-business tests, and integration with concurrent offerings. ## Intake (Mandatory) Gather before drafting unless the user says "use defaults" or "just draft": 1. **Issuer details** — state of formation, principal office, org chart 2. **Operations by state** — revenues, assets, employees, locations; current financials 3. **Offering terms** — security type, size, pricing, use of proceeds, escrow, commissions 4. **Draft materials** — term sheet, offering document, subscription agreement, marketing copy 5. **Distribution plan** — channels, internet use 6. **Residency verification process** — online/offline workflow, document retention 7. **Prior and planned offerings** — types, dates, investor pools (6-month look-back/forward) 8. **State blue sky rules** — registration forms, examiner guidance, filing requirements **Defaults if no response:** Rule 147A; registration by qualification; standard residency documentation. Label all defaults. ## Step 1: Select Safe Harbor (Rule 147 vs. 147A) | Factor | Rule 147 [VERIFY] | Rule 147A [VERIFY] | Decision | |---|---|---|---| | Issuer formation | Must be in offering state | Out-of-state OK | Formed elsewhere → 147A | | Principal place of business | Required | Required | Document "nerve center" | | General solicitation | Restricted | Permitted with legends | Broad internet → 147A | | Offers to out-of-state | Risky | OK if sales in-state only | Confirm offer definition | Verify current text: 17 CFR 230.147, 230.147A, 230.152; Securities Act §§ 3(a)(11), 5, 17(a) [VERIFY]. ## Step 2: Analyze Doing-Business Tests All four must be met. Document evidence for each: | Test [VERIFY] | Threshold | Evidence | |---|---|---| | Revenue | ≥ 80% in-state | Revenue by customer/location | | Assets | ≥ 80% in-state | Balance sheet, fixed asset register | | Proceeds | ≥ 80% used in-state | Use-of-proceeds budget and tracking | | Employees | Majority in-state | Payroll and headcount by state | ## Step 3: Build Residency Verification Protocol | Investor Type | Standard [VERIFY] | Minimum Documents | |---|---|---| | Individual | Principal residence in state | Driver license + utility bill or tax record | | Entity | Principal place of business in state | Operating agreement + business address proof | | Entity formed for offering | Look-through to owners | Residency docs for all beneficial owners | - Require documentary proof before subscription acceptance; retain in investor file - IP checks and online gating are supplemental only — not sufficient alone - Apply look-through for entities formed to purchase the securities ## Step 4: Advertising and Offer Controls - Place legends on all materials and landing pages - Gate access to offering materials by state before disclosure - No paid ads targeting beyond the offering state - Train all personnel: no discussions with non-residents - Preserve copies of all ads, targeting settings, and gating records ## Step 5: Resale Restrictions and Transfer Controls - Restricted period: six months from issuer sale [VERIFY] - Restrictive legends on certificates or book-entry statements - Stop-transfer instructions to transfer agent or internal ledger - Require approval of any transfer during restricted period **Legend template:** > THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. FOR A PERIOD OF SIX MONTHS FROM THE DATE OF SALE BY THE ISSUER, ANY RESALE MUST BE MADE ONLY TO PERSONS RESIDENT WITHIN THE STATE OF [STATE]. ANY TRANSFER IN VIOLATION OF THIS RESTRICTION IS VOID. **Subscription representation template:** > Subscriber represents that Subscriber's principal residence (or principal place of business) is in the State of [STATE], and agrees to provide documentation reasonably requested to confirm residency. Subscriber acknowledges the securities are restricted and may not be transferred to non-residents during the applicable restricted period. ## Step 6: Integration Risk and State Registration **Integration analysis:** | Item | Risk | Mitigation | |---|---|---| | Recent offerings | Integration with intrastate | Rule 152 framework and spacing [VERIFY] | | Concurrent offerings | Confusing investor pools | Separate materials and investor lists | | General solicitation elsewhere | Contaminates intrastate | Pause or segregate campaigns | **State registration by qualification:** - Confirm registration path under state law [VERIFY] - Assemble forms, consents to service, filing fees - Confirm financial statement and audit requirements [VERIFY] - Address merit review: escrow, commissions, pricing, dilution - Align offering document, state forms, and marketing materials - Pre-clear advertising if required [VERIFY] ## Step 7: Deliverables 1. **Compliance memo** — rule selection, eligibility, residency controls, advertising controls, resale restrictions, integration analysis 2. **Execution checklist** for issuer and counsel 3. **Legend and subscription representations** 4. **State registration filing checklist** 5. **Assumptions, open items, and risk flags** Every output must begin with: - **Assumptions** — rule selected, doing-business test results, residency standard - **Open Items** — missing financials, unresolved state requirements, [VERIFY] items **Contingencies:** Reject non-resident subscriptions and document; if residency error discovered, consult counsel immediately; if controls are unenforceable, recommend alternative exemptions. ## Post-Draft Alignment (Mandatory) After delivering, ask: 1. Are doing-business calculations confirmed against current financials? 2. Is the advertising/distribution plan finalized? 3. Should residency verification be tested with a sample workflow? 4. Are there concurrent or recent offerings needing integration analysis? ## Checks and Pitfalls **Quality gate — verify before finalizing:** - Safe harbor selection documented with rationale - All four doing-business tests analyzed with evidence - Residency protocol requires documentary proof - Legend language matches correct rule and state - Advertising controls enforceable for planned channels - Integration analysis covers 6-month look-back and look-forward - State registration path confirmed with forms and fees - Subscription representations match legend language - All citations verified or flagged [VERIFY] - Assumptions and open items listed prominently **Rules:** - Output is not legal advice; attorney review required before use - Mark unverified rule text, thresholds, or dates with `[VERIFY]` - Resolve federal vs. state conflicts in favor of the more restrictive rule - If controls cannot be enforced, recommend a different exemption - Maintain single source of truth across forms, disclosures, and marketing - Flag broker-dealer or finder compensation for separate review - Do not fabricate rule thresholds, state requirements, or registration procedures — every citation must be verified or flagged - Treat confidentiality and truthfulness as mandatory (Model Rules 1.1, 1.3, 1.6, 3.3, 4.1) [VERIFY]