Glossary term
Rule 147A
Rule 147A is an SEC intrastate offering exemption that allows broader offering communications while limiting sales to in-state residents.
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What Is Rule 147A?
Rule 147A is an SEC intrastate offering exemption that lets qualifying issuers raise capital from investors in a single state. It is similar to Rule 147, but it gives issuers more flexibility by allowing offers that may be accessible to out-of-state residents, as long as sales are made only to residents of the state where the offering is conducted.
Rule 147A was created to modernize intrastate offerings in a world where internet communications can cross state lines. It is still a local-offering exemption, not a national public offering pathway.
Key Takeaways
- Rule 147A is an SEC exemption for intrastate securities offerings.
- It permits broader offers, including internet-accessible offers, if sales are limited to in-state residents.
- The issuer may be organized outside the state if its principal place of business is in the offering state and other conditions are met.
- Issuers must still comply with state securities laws, resale limits, disclosures, and anti-fraud rules.
How Rule 147A Works
Rule 147A lets an eligible issuer conduct an intrastate offering while using modern communication channels. The issuer must have its principal place of business in the state or territory where securities are sold and must satisfy doing-business requirements that show the offering is genuinely local.
Sales are limited to residents of that state or territory. The rule also includes resale restrictions designed to keep the securities from quickly moving into interstate commerce.
Rule 147A Compared With Rule 147
Feature | Rule 147A | Rule 147 |
|---|---|---|
Offers | May be accessible to out-of-state residents | More restrictive because offers are tied to the intrastate exemption. |
Sales | Limited to in-state residents | Limited to in-state residents. |
Issuer organization | May be organized out of state if principal place of business is in-state | More closely tied to the state of organization. |
State law | Still applies | Still applies. |
Practical Compliance Questions
Rule 147A can help local issuers use websites, social media, or other communications without automatically losing the exemption because an offer was visible outside the state. But it does not relax the in-state sales requirement. Issuers still need processes to verify residency and comply with state offering rules.
Investors should understand that Rule 147A securities may be illiquid and risky. The offering may involve a small local business with limited operating history, limited financial information, and no active trading market.
The Bottom Line
Rule 147A is a modern intrastate offering exemption. It gives issuers more flexibility in how they communicate an offering, but sales remain limited to in-state residents and compliance remains highly specific.