Syndicators looking to raise capital from investors in Indiana should be aware of Indiana’s Blue Sky Laws. These laws regulate the securities industry within the state and understanding the basics of Indiana’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 Indiana’s Blue Sky Rules apply. 

 

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

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

Filing fee – None

New notice – No Fee

Late fee for late filings – None

 

What are Indiana’s Blue Sky Laws?

IN ST 5-1.2-4-25 Bonds, guarantees, and securities; exemption from securities registration laws

IN ST 5-1-14-14 Loans, expenditures, and issuance of bonds for economic development

IN ST 5-1.5-9-12 Securities; registration requirements; exemption

IN ST 5-20-2-16 Securities exemption

IN ST 8-14.5-6-14 Security registration exemption

IN ST 8-18-22-12 Exemption from securities registration laws

IN ST 8-21-12-15 Finances of authority; bonds

IN ST 8-22-3.7-21 Exemptions from taxation and registration requirements

IN ST 13-21-12-3 Security exempt from registration requirements of IC 23

IN ST 23-6-4-21 Exemption of securities from registration; tax exemptions, credits, or privileges; exemption from financial institution regulation

IN ST 23-19-2-1 Exempt securities

IN ST 23-19-2-3 Additional exemptions and waivers

IN ST 5-28-30-21 Exemption of guarantees from securities registration laws

IN ST 36-7-12-32.1 Exemption from securities registration

IN ST 36-7-23-55 Securities exempt from registration laws

IN ST 36-7.5-4-13 Exemption from taxation and securities registration law

IN ST 36-9-31-16 Securities registration exemption

IN ST 36-9-32-7 Bonds; issuance and sale; payment; ordinances; amount; validity; taxation; refunding bonds; security registration

 

What are Indiana’s securities laws exemptions?

Governmental entities; certain foreign governments including Canada; Financial institutions: banks, savings institutions, trust companies, savings associations, credit unions, industrial loan associations etc.; Other entities: railroads, common carriers, public utilities and public utility holding companies; Agricultural cooperatives; Industrial development bonds or “qualified bonds”; Listed stock exchange securities etc.; Commercial paper obligations; Employee benefit plan; Guaranteed student loan secondary market securities; Credit corporations; Any guarantees by the corporation under the guaranty program

 

Frequently Asked Questions

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

That depends. If the offering you are putting together is under Regulation D and not one of the Indiana-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 Indianapolis, Indiana, that was going to be offered in different states, and you didn’t need counsel on questions related to Indiana 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 Indiana 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 Fort Wayne, Indiana, all of the investors were from Indiana, and you wanted to use one of Indiana’s Blue Sky Laws above as an exception to registration, then you would need to work with someone licensed in Indiana.

 

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

They can look, but they can’t give you advice as it pertains to Indiana. 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 Evansville, Indiana, 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.