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


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

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

Filing fee – Fixed

New notice – $100

Late fee for late filings – None


What are Michigan’s Blue Sky Laws?

MI ST 451.2201 Exempt securities, generally

MI ST 451.2202a Exemptions from §§ 451.2301 to 451.2306 and 451.2504; requirements and limitations; powers and duties of administrator; quarterly report by issuer; registration of website; violations

MI ST 451.2203 Additional exemptions; waivers

MI ST 451.2204 Denial, suspension, limitation, revocation, etc., of exemption or waiver; liability for certain conduct following entry of order under section


What are Michigan’s securities laws exemptions?

Governmental entities; certain foreign governments including Canada; Financial institutions: banks, savings institutions, trust companies, savings and loan, building and loan, small loan corporations, credit unions, industrial loan associations etc.; Cooperative corporations; Other entities: railroads, common carriers, public utilities, holding companies, and insurance companies; Listed stock exchange securities; Non-profit persons; Current transaction commercial paper; Employee benefit plan

Except as otherwise provided in this act, an offer or sale of a security by an issuer is exempt from the requirements of sections 301 to 306 and 5041 if the offer or sale meets all of the requirements.

A rule or order under this act may exempt a security, transaction, or offer, or a rule or order under this act may exempt a class of securities, transactions, or offers, from any or all of the requirements of sections 301 to 306 and 504, and a rule or order under this act may waive any or all of the conditions for an exemption or offers under sections 201 and 202


Frequently Asked Questions

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

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


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

They can look, but they can’t give you advice as it pertains to Michigan. 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 Warren City, Michigan, 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.