25-Offerees Per Twelve-Month Period
Limited Offeree

Statute: §  551.23(11), Wis. Stats.

Used for:  Offers to twenty-five or fewer persons in Wisconsin in any period of twelve consecutive months.

Note:  Sales of securities made under this exemption may result only from the twenty-five or fewer offers.  Certain institutional and accredited investors need not be counted for purposes of the 25-offeree limit.   The offeror must reasonably believe that all investors are purchasing for investment purposes rather than for resale or some other purpose.  No commission or other remuneration may be given for soliciting, except to Wisconsin-licensed brokers-dealers or agents. If an issuer or any of its controlling or affiliated persons is the subject of certain enforcement action, specified in § 551.23(19)(c), Wis. Stats., the issuer and its controlling and affiliated persons are disqualified from use of this exemption unless the disqualification is waived by the Division.

Filing requirement: Self-executing, with exceptions. No filing or Consent to Service of Process is necessary in order to claim this exemption, except when the offering exceeds $100,000 and the security being offered is a limited partnership engaged in oil and gas drilling or mining activities, or is an investment contract security (as used here, "investment contract security" does not include common stock).  For offerings subject to those exceptions, a notice filing must be filed with the Division under § DFI-Sec 2.02(5)(d)1., Wis. Adm. Code, at least ten days prior to the offering of the securities to any person in Wisconsin, unless the offering is through an unaffiliated broker-dealer licensed in Wisconsin.

Notice filing, if required as set forth at § DFI-Sec 2.03, Wis. Adm. Code.

• Filing fee: $200, as set forth at § DFI-Sec 7.01(2)(b), Wis. Adm. Code made payable to Wisconsin DFI-Division of Securities.
• Form required: There is no required form. File a cover letter, the required exhibits, and the fee at least ten days prior to the offering in this state, referencing the statute or rule section under which the notice is filed.
• Exhibits required: A copy of the prospectus, offering document, all other material to be delivered to offerees in connection with the transaction, and all other information the Division may require after the filing.
• Review time: Ten calendar days, unless extended pursuant to § DFI-Sec 2.03(2), Wis. Adm. Code.

In addition, the Division can issue a discretionary Order of Exemption that further conditions the exemption, increases or decreases the number of offerees, or waives conditions.

To file a request for a discretionary Order of Exemption, see Discretionary Order of Exemption.

Administrative Code references: §§ DFI-Sec 1.02(6), 1.02(13), 2.02(5), and 2.02(9)(c), Wis. Adm. Code.

Frequently asked questions:

Q: Is this exemption self-executing?

    A:  Other than the exception noted below, the exemption is self-executing, no filing or Consent to Service of Process is required. However, where the entire offering (not just in Wisconsin), exceeds $100,000 and the security being offered is an interest in a limited partnership engaged in oil and gas drilling or mining activities; or is an investment contract security (as used here, "investment contract security" does not include common stock), a notice must be filed with the Division under § DFI-Sec 2.02(5)(d)1, Wis. Adm. Code, at least ten days prior to offering the securities to any person in Wisconsin, unless the offering is through an unaffiliated broker-dealer that is licensed in Wisconsin.

    Under § 551.23(11)(b), Wis. Stats., the Division may issue a discretionary Order of Exemption that further conditions the exemption, increases or decreases the number of offerees, or waives conditions. The exemption is not available to persons or entities disqualified under § DFI-Sec 2.02(5)(d)2, Wis. Adm. Code

Q:  Is there any limit on the number of people the offeror can talk to?

    A: Yes. They may offer securities and distribute solicitation materials only to twenty-five or fewer persons in Wisconsin, other than certain institutional and accredited investors.

Q: Will broadcast or publication of advertising or circulation of advertising to more than 25 persons make an issuer ineligible for this exemption?

    A: Yes, because any general advertising would necessarily constitute an offer to more than twenty-five persons.

Q: Is there a limit on the amount of money that may be raised?

    A: No. The limit is solely in the number of persons who may be offered the securities, not to the amount that may be raised from those offers.

Q: Is this exemption available to non-Wisconsin issuers?

    A: Yes. As long as the requirements of the exemption are met, a non-Wisconsin issuer may use this exemption.

Q: How is the 12-month period calculated?

    A: On the day an offer is to be made, count the number of offers made in the preceding 12 month period.  If offers to fewer than 25 persons have been made, as many offers as will bring the total to 25 for the 12 consecutive months may be made.

Q: Does inviting someone in Wisconsin to travel to another state to participate in a sale of securities constitute an offer in Wisconsin?

    A: Yes. Any offer made to any person within the boundaries of the state of Wisconsin, regardless of the offeree's residence and regardless of where the actual sale takes place, is considered an offer made in Wisconsin.

Important interpretive letters:

5/30/80 letter re:  Air Wisconsin, Inc.   A stock "option" is specifically included within the definition of security under § 551.02(13)(a), Wis. Stats.  Therefore, as long as the previous grant by a corporation of options complied with all of the requirements for use of the registration exemption set forth in § 551.23(11), Wis. Stats., the subsequent exercise of the same options would qualify as a "transaction pursuant to an offer .  .  .  ," (§ 551.23(11), Wis.  Stats.) since the exemption limits not the number of transactions pursuant to exempt offers, rather, the number of offers is limited.  The exercise of the option, assuming it is pursuant to an earlier offer that did fit under the exemption set forth in this section, will not constitute an additional offer; rather, it is a transaction pursuant to the initial offer.

10/26/77 letter re:  advertising.   In order to qualify for this exemption, no newspaper advertising is allowed.   The publication of an advertisement in a newspaper soliciting purchase of the securities would constitute an "offer" to each reader of the newspaper, which the Division will presume results in more than the ten offers permitted.

Related considerations:    February, 1984 Wisconsin Securities Bulletin.  As a result of language contained in 1983 Wisconsin Act 87 (effective November  17, 1983), representatives currently licensed for a broker-dealer or issuer can, under certain conditions, also acquire licenses to represent issuers intending to effect exempt securities transactions under those sections of the Wisconsin Uniform Securities Law.

History :  Adopted January 1, 1970.  Materially similar to § 402(b)(9) of the Uniform Securities Act. Amended effective 10/1/02 to increase number of offers from 10 to 25.