Syndicators looking to raise capital from investors in Hawaii should be aware of the Hawaii’s Blue Sky Laws. These laws regulate the securities industry within the state and understanding the basics of Hawaii’s blue sky laws will help you make smart business decisions about how you put together an offer and protect yourself from potential legal trouble.


What are Blue Sky Laws in General? 

The purpose of securities laws is to protect investors. There are two levels of regulatory agencies that provide that protection: the Securities and Exchange Commission (the SEC) and each state’s security regulation agency.

Federal law has severely restricted the states’ abilities to review or restrict sales of most securities when offered through a Federal regulation (such as syndication of a Reg D offering). The states do, however, often require a notice be filed with them along with the appropriate fee, conduct investigations, and bring fraud actions if necessary in order to protect those domiciled in their states.

When everything takes place within the state, then Hawaii’s Blue Sky Rules apply. 


What if I Need to Notify Hawaii about my Regulation D Syndication?

Here are the basic facts you need to know about giving notice to Hawaii about your Reg D Rule 506b or 506c offer:

Filing fee – Fixed

New notice – $100

Late fee for late filings – None


What are Hawaii’s Blue Sky Laws?

HI ST § 421C-36 Exemption of voting stock from registration

HI ST § 485A-201 Exempt securities

HI ST § 485A-203 Additional exemptions and waivers

HI ST § 485A-301 Securities registration requirement


What are Hawaii’s securities laws exemptions?

Governmental entities; certain foreign governments including Canada; Financial institutions: banks, savings institutions, trust companies, financial services loan companies, savings and loan, building and loan, and credit unions; Other entities: common carriers, public utilities, holding companies and insurance companies; Variable annuity contracts; Consumer cooperative or agricultural cooperative associations; Listed security market, over- the-counter and foreign securities; Federal registered securities; Commodity future options; Non-profit persons; Current transaction commercial paper; Employee benefit plan; Local development companies


Frequently Asked Questions

Do I need an attorney from Hawaii then to put together an offering?

That depends. If the offering you are putting together is under Regulation D and not one of the Hawaii-specific Blue Sky Laws (as discussed above), then probably not. 

For example, if you needed a real estate syndication attorney to put together a private placement memorandum for a multifamily deal in Urban Honolulu, Hawaii, that was going to be offered in different states, and you didn’t need counsel on questions related to Hawaii laws, then chances are a licensed syndication lawyer would be able to help. They could even put together the entity for you and write the operating agreement, they just couldn’t provide you counsel on the specific laws of Hawaii and how they may or may not pertain to your offer.

However, if you were putting together a private placement memorandum for a development project in East Honolulu, Hawaii, all of the investors were from Hawaii, and you wanted to use one of Hawaii’s Blue Sky Laws above as an exception to registration, then you would need to work with someone licensed in Hawaii.


Is it ok if the real estate syndication attorney, licensed outside of Hawaii, looks over my purchase contract?

They can look, but they can’t give you advice as it pertains to Hawaii. For example, Tilden Moschetti, Esq, syndication attorney for the Moschetti Syndication Law Group, will look, if asked, about the contract underlying your purchase contract in Hilo, Hawaii, but makes it clear that he can give business consulting advice (discussion on price and broad deal points like the length of time until closing), but cannot speak to any specific term as he is not licensed there.