TITLE 21. SECURITIES AND RETAIL FRANCHISING

STATE CORPORATION COMMISSION

Final Regulation

Titles of Regulations: 21VAC5-40. Exempt Securities and Transactions (amending 21VAC5-40-100, 21VAC5-40-140; adding 21VAC5-40-210).

21VAC5-45. Federal Covered Securities (amending 21VAC5-45-20, 21VAC5-45-30).

21VAC5-100. Disclosure of Information or Documents by Commission (amending 21VAC5-100-10).

Statutory Authority: §§ 12.1-13 and 13.1-523 of the Code of Virginia.

Effective Date: January 1, 2026.

Agency Contact: Jude Richnafsky, Manager of Examinations, Division of Securities and Retail Franchising, State Corporation Commission, Tyler Building, Ninth Floor, P.O. Box 1197, Richmond, VA 23218, telephone (804) 371-9883, or email jude.richnafsky@scc.virginia.gov.

AT RICHMOND, NOVEMBER 3, 2025

COMMONWEALTH OF VIRGINIA, ex rel.

STATE CORPORATION COMMISSION

CASE NO. SEC-2025-00024

Ex Parte: In the matter of

Adopting Revisions to the Rules

Governing the Virginia Securities Act

ORDER ADOPTING REGULATIONS

On August 11, 2025, the State Corporation Commission ("Commission") entered an Order Establishing Proceeding regarding a proposal by the Division of Securities and Retail Franchising ("Division") to revise Chapters 40, 45, and 100 of Title 21 of the Virginia Administrative Code, which provide, in part, the Commission’s rules governing the Virginia Securities Act ("Act"), § 13.1-501 et seq. of the Code of Virginia.

The Division recommended revisions to Chapters 40, 45, and 100 to: (a) amend Rules 21VAC5-40-100, 21VAC5-40-140, 21VAC5-45-20, and 21VAC5-45-30 to assess late charges for filings related to the associated exemptions in § 13.1-514 B of the Act; (b) amend Rule 21VAC5-40-100 to remove the reference to repealed Rule 21VAC5-40-30; (c) create a new Rule at 21VAC5-40-210 to establish filing requirements and a timeline for post-effective filings for securities exempted pursuant to § 13.1-514.1 B of the Act; and (d) amend Rule 21VAC5-100-10 D to broaden the list of approved governmental entities for disclosure under § 13.1-518 B of the Act. Collectively, these revisions are referred to in the Order Establishing Proceeding as the proposed revisions.

The Order Establishing Proceeding and proposed revisions were posted on the Commission’s website, sent to interested persons, and published in the Virginia Register of Regulations on September 8, 2025. The Order Establishing Proceeding invited any interested persons to participate and required that any comments or requests for a hearing on the proposed revisions be submitted in writing on or before October 7, 2025.

No comments were filed nor were any requests for hearing made in this matter.

The Division has not recommended that the Commission further amend the proposed revisions following the entry of the Order Establishing Proceeding.

NOW THE COMMISSION, having considered this matter, concludes that the proposed revisions should be adopted effective January 1, 2026.

Accordingly, IT IS ORDERED THAT:

(1) The proposed revisions, attached hereto and made a part hereof, are ADOPTED effective January 1, 2026.

(2) The Division shall provide notice of this Order Adopting Regulations ("Order") and the adopted revisions to Chapters 40, 45, and 100 of Title 21 to any interested persons as the Division may designate.

(3) The Commission’s Office of General Counsel shall provide a copy of this Order and the adopted revisions to Chapters 40, 45, and 100 of Title 21 to the Virginia Registrar of Regulations for publication in the Virginia Register of Regulations.

(4) Interested persons may download unofficial copies of this Order and the adopted revisions to Chapters 40, 45, and 100 of Title 21 from the Commission’s website: scc.virginia.gov/case-information.

(5) This case is dismissed.

A COPY hereof, along with the attached regulations, shall be sent by the Clerk of the Commission to: C. Meade Browder, Jr., Senior Assistant Attorney General, at MBrowder@oag.state.va.us, Office of the Attorney General, Division of Consumer Counsel, 202 N. 9th Street, 8th Floor, Richmond, Virginia 23219-3424; and the Commission’s Office of General Counsel and the Director of the Division of Securities and Retail Franchising.

Summary:

The amendments (i) adopt late charges for certain securities exemption filings; (ii) remove an obsolete cross-reference; (iii) establish filing requirements and a timeline for post-effective filings for securities exempted pursuant to § 13.1-514.1 B of the Code of Virginia; and (iv) broaden the list of approved governmental entities for disclosure under § 13.1-518 of the Code of Virginia.

21VAC5-40-100. Domestic issuer limited transactional exemption.

A. In accordance with § 13.1-514 B 7 b of the Act, an offer or sale by the issuer of any of the following securities issued by a corporation, partnership, limited liability company, or real estate investment trust, as the case may be: note, stock, bond, debenture, evidence of indebtedness, partnership interest, share of beneficial interest in a real estate investment trust, a warrant or right to purchase or subscribe to any of the foregoing or a security convertible into any of the foregoing, shall be exempt from the securities, broker-dealer, and agent registration requirements of the Act, provided the following conditions are met:

1. In connection with an offering pursuant to this section, there shall be no more than 35 purchasers in this Commonwealth during any period of 12 consecutive months;

2. In connection with an offering pursuant to this section, the issuer shall:

a. Deliver Form VA-1 and in certain prescribed circumstances, Part 2 of Form VA-1 or a disclosure document containing the information required by Form VA-1 and Part 2, if required, to each prospective purchaser prior to a sale to a purchaser; and

b. Sell securities only to purchasers, each of which the issuer shall and, after reasonable inquiry, believe either that the purchaser:

(1) Has sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the prospective investment, and is able to bear the economic risks of the prospective investment; or

(2) Together with a purchaser representative or representatives, has sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the prospective investment, and that the purchaser is able to bear the economic risks of the prospective investment; and

3. No commission or similar remuneration is paid or given, directly or indirectly, for soliciting a prospective purchaser, or in connection with sales of securities in reliance on this section, unless paid to a broker-dealer and its the broker-dealer's agent who are registered under the Act and the securities are offered only to persons whose investing history demonstrates an ability to evaluate the merits and risks of the investment and who are capable of bearing the economic risks of the investment.

B. This exemption is not available with respect to an offering:

1. Pursuant to a registration statement or Regulation A (17 CFR 230.251-230.263) notification which that has been filed under the Securities Act of 1933;

2. Pursuant to an exemption under Regulation D (17 CFR 230.505), which offering may be exempted in Virginia only by 21VAC5-40-30, Uniform Limited Offering Exemption;

3. 2. If the amount of money to be raised from the offering exceeds $2,000,000 $2 million;

4. 3. If the issuer has offered for sale or sold its securities which that are of the same or a similar class as that to be offered for sale or sold under this section within 180 days prior to this offering or if the issuer offers for sale or sells its securities that are of the same or a similar class as those offered and sold under this section within 180 days after this offering; or

5. 4. If the issuer does not have its principal place of business in this Commonwealth.

C. An exemption under this section is not available if the issuer, its the issuer's directors, officers, partners, members, trustees, or beneficial owners of 10% or more of a class of its voting securities, or its the issuer's promoters or agents connected with it or a person offering or selling the securities for or on behalf of the issuer:

1. Has been convicted (or has pleaded nolo contendere) within five years prior to reliance on this section of a felony or a misdemeanor in connection with the purchase or sale of a security, or in connection with making a false filing with the SEC or a state securities administrator or of a felony involving fraud or deceit, including but not limited to, forgery, embezzlement, obtaining money under false pretenses, larceny, conspiracy to defraud, or theft;

2. Is subject to an order, judgment, or decree of a court of competent jurisdiction that temporarily or preliminarily restrains or enjoins, or is subject to an order, judgment, or decree of a court of competent jurisdiction, entered within five years prior to reliance on this section, which permanently restrains or enjoins a person from engaging in or continuing a practice or conduct in connection with the purchase or sale of a security, or involving the making of a false filling filing with the SEC or a state securities administrator;

3. Is subject to a United States Postal Service false representation order entered within five years prior to reliance on this section; or

4. Is subject to a state administrative order entered within five years prior to reliance on this section by a state securities administrator in which fraud or deceit was found.

D. The issuer shall file with the commission 15 days prior to the first sale in this Commonwealth in reliance on this section:

1. A copy of Form VA-1, including Part 2, if applicable or a disclosure document containing the information required by the Form form;

2. An executed Consent to Service of Process (Form U2) appointing the Clerk of the commission as its the issuer's agent for service of process;

3. An undertaking to promptly provide to the commission, upon request, additional information as the commission may require; and

4. A nonrefundable filing fee of $250 payable to the Treasurer of Virginia.

5. Should the filing not be timely made in accordance with this subsection, in addition to the filing fee set forth in this subsection, a late charge of $250 will be assessed if filed within 90 days of the first sale in this Commonwealth, $500 if filed within six months of the first sale, and $750 if filed more than six months after the first sale.

E. The issuer shall, within 30 days after the completion of the offering, file with the commission a report of sales indicating the number of purchasers in this Commonwealth, a description of the securities sold to such purchasers, and the total dollar amount raised.

F. This section does not exempt persons or transactions from the anti-fraud provisions of the Act.

G. The commission may deny the exemption if it the commission determines that a particular transaction or offering is not in the public interest.

H. For purposes of this section and § 13.1-514 B 7 b of the Act, the following shall apply:

1. Neither the issuer nor persons acting on its behalf shall offer or sell the securities by form of general solicitation or advertising, including but not limited to, the following:

a. "Cold calls" by telephone or other means, advertising, article, notice, or other communication published in a newspaper, newsletter, magazine, mass mailing, electronic media, or similar media or broadcast over television or radio; or

b. Seminars or meetings whose attendees have been invited by general solicitation or general advertising.

2. Securities acquired in a transaction under this section shall not be resold without registration under or exemption from the Act. The issuer or a person acting on its the issuer's behalf shall exercise reasonable care to assure that the purchasers of the securities in an offering under this section are purchasing for investment and not with a view to distribution of the securities. Reasonable care shall include, but not be limited to, the following:

a. Reasonable inquiry to determine whether the purchaser is acquiring the securities for himself or for other persons;

b. Placement of a restrictive legend on the certificate or other document evidencing the securities. The legend shall be in the following form: THE SECURITIES REPRESENTED BY THIS CERTIFICATE (OR OTHER DOCUMENT) HAVE BEEN ISSUED PURSUANT TO A CLAIM OF EXEMPTION FROM THE REGISTRATION OR QUALIFICATION PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS AND SHALL NOT BE SOLD OR TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM;

c. Issuance of stop-transfer instructions to the issuer's transfer agent with respect to the securities, or, if the issuer transfers its the issuer's own securities, notation in the appropriate records of the issuer; and

d. Obtaining from the purchaser a signed agreement that the securities will not be sold unless they the securities are registered under the Act or exempted from registration.

3. All sales that are part of the same offering under this section shall meet all the conditions of this section. Offers and sales that are made more than six months before the commencement of an offering under this section or are made more than six months after completion of an offering under this section will not be considered part of that offering, so long as during those six-month periods there are no offers or sales of securities by or on behalf of the issuer that are of the same or a similar class as those offered or sold under this section. If securities of the same or a similar class as those offered pursuant to this section are offered or sold less than six months before or after an offer or sale pursuant to this section, those offers to sell or sales, will be deemed to be "integrated" with the offering.

I. In proceedings involving this section, the burden of proving the exemption or an exception from a definition or condition is upon the person claiming it.

J. The exemption authorized by this section shall be known and may be cited as the "Domestic Issuer Limited Transactional Exemption."

21VAC5-40-140. Accredited investor exemption.

A. In accordance with § 13.1-514 B 19 of the Act, any offer or sale of a security by an issuer in a transaction that meets the requirements of this section is exempt from the securities, broker-dealer, and agent registration requirements of the Act.

B. Sales of securities shall be made only to persons who are or the issuer reasonably believes are "accredited investors," as that term is defined in 17 CFR 230.501(a), and who:

1. Have sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the prospective investment, and are able to bear the economic risks of the prospective investment; or

2. Together with a purchaser representative or representatives, have sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the prospective investment, and are able to bear the economic risks of the prospective investment.

C. The exemption is not available to an issuer that is in the development stage that either has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person.

D. The issuer reasonably believes that all purchasers are purchasing for investment and not with the view to or for sale in connection with a distribution of the security. Any resale of a security sold in reliance on this exemption within 12 months of sale shall be presumed to be with a view to distribution and not for investment, except a resale pursuant to a registration statement effective under §§ 13.1-508 through 13.1-510 of the Act or to an accredited investor pursuant to an exemption available under the Act.

E. 1. The exemption is not available to an issuer if the issuer, any of the issuer's predecessors, any affiliated issuer, any of the issuer's directors, officers, general partners, beneficial owners of 10% or more of any class of its equity securities, any of the issuer's promoters presently connected with the issuer in any capacity, any underwriter of the securities to be offered, or any partner, director, or officer of such underwriter:

a. Within Has filed within the last five years, has filed a registration statement which that is the subject of a currently effective registration stop order entered by any state securities administrator or the SEC;

b. Within Has been convicted within the last five years, has been convicted of any criminal offense in connection with the offer, purchase, or sale of any security, or involving fraud or deceit;

c. Is currently subject to any state or federal administrative enforcement order or judgment, entered within the last five years, finding fraud or deceit in connection with the purchase or sale of any security; or

d. Is currently subject to any order, judgment, or decree of any court of competent jurisdiction, entered within the last five years, temporarily, preliminarily, or permanently restraining or enjoining such party from engaging in or continuing to engage in any conduct or practice involving fraud or deceit in connection with the purchase or sale of any security.

2. Subdivision 1 of this subsection shall not apply if:

a. The party subject to the disqualification is licensed or registered to conduct securities related business in the state in which the order, judgment, or decree creating the disqualification was entered against such party;

b. Before the first offer under this exemption, the state securities administrator, or the court or regulatory authority that entered the order, judgment, or decree, waives the disqualification; or

c. The issuer establishes that it did not know and in the exercise of reasonable care, based on a factual inquiry, could not have known that a disqualification existed under this section.

F. A general announcement of the proposed offering may be made by any means. The general announcement shall include only the following information, unless additional information is specifically permitted by the commission:

1. The name, address, and telephone number of the issuer of the securities;

2. The name, and a brief description and price (if known) of any security to be issued;

3. A description of the business of the issuer in 25 words or less;

4. The type, number, and aggregate amount of securities being offered;

5. The name, address, and telephone number of the person to contact for additional information; and

6. A statement that:

a. Sales will only be made to accredited investors;

b. No money or other consideration is being solicited or will be accepted by way of this general announcement; and

c. The securities have not been registered with or approved by any state securities agency or the SEC and are being offered and sold pursuant to an exemption from registration.

G. The issuer, in connection with an offer, may provide information in addition to the general announcement under subsection F of this section, if such information:

1. Is delivered through an electronic database that is restricted to persons who have been pre-qualified as accredited investors; or

2. Is delivered if the issuer reasonably believes that the prospective purchaser is an accredited investor.

H. No telephone solicitation shall be permitted unless, prior to placing the call, the issuer reasonably believes that the prospective purchaser to be solicited is an accredited investor.

I. Dissemination of the general announcement of the proposed offering to persons who are not accredited investors shall not disqualify the issuer from claiming the exemption under this section.

J. The issuer shall file with the commission no later than 15 days after the first sale in this Commonwealth from an offering being made in reliance upon this exemption (filing deadline):

1. A notice on the Model Accredited Investor Exemption Uniform Notice of Transaction form.

2. An executed consent of service of process (Form U-2) appointing the Clerk of the commission as its the issuer's agent for purpose of service of process, unless a currently effective consent to service of process is on file with the commission.

3. A copy of the general announcement.

4. A nonrefundable filing fee of $250 payable to the Treasurer of Virginia.

5. Should the filing not be timely made in accordance with this subsection, in addition to the filing fees set forth in this subsection, a late charge of $250 will be assessed if filed within 90 days of the filing deadline, $500 if filed within six months of the filing deadline, and $750 if filed more than six months after the filing deadline.

21VAC5-40-210. Information to be furnished with exemption requests under § 13.1-514.1 B of the Act; post-effective amendments.

A. A person requesting that a security receive an exemption from the requirements of § 13.1-507 of the Act pursuant to § 13.1-514.1 B of the Act must submit an application to the division that includes:

1. Type of security offered;

2. The amount the offering is seeking to raise;

3. Form U-2;

4. Form U-2A (if applicable);

5. Offering circular or prospectus;

6. NASAA Cross-Reference Sheet (if applicable);

7. Proof or statement in support of exemption;

8. Legal opinion of counsel;

9. Articles or certificate of organization;

10. Bylaws or corporate governance documents;

11. Other material information known to the applicant; and

12. Any other information that the division may request.

B. If an agent of the issuer is to be used in connection with the offering, the applicant must file an application pursuant to 21VAC5-20-160. If the agent of the issuer is not being compensated or remunerated for the sales, the applicant may request a waiver of the examination requirements under 21VAC5-20-160 B 3 by satisfying the requirements of 21VAC5-20-220 B 1.

C. For securities previously exempted under this section that are part of a continuous offering, the issuer may file a post-effective amendment with the division that includes the annual updated offering document within 120 days after the end of the issuer's fiscal year. Post-effective amendments under this subsection are not allowed for any of the following:

1. The amount of securities being offered changes;

2. The type of security being offered changes; or

3. The person offering the security to the public changes from the previously issued order of exemption.

21VAC5-45-20. Offerings conducted pursuant to Rule 506 of Federal Regulation D (17 CFR 230.506): filing requirements and issuer-agent exemption.

A. An issuer offering a security that is a covered security under § 18 (b)(4)(D) of the Securities Act of 1933 (15 USC § 77r(b)(4)(D)) shall file with the commission no later than 15 days after the first sale of such federal covered security in this Commonwealth (filing deadline):

1. A notice on SEC Form D (17 CFR 239.500), as filed with the SEC.

2. A filing fee of $250 payable to the Treasurer of Virginia.

B. An amendment filing shall contain a copy of the amended SEC Form D. No fee is required for an amendment.

C. For the purpose of this chapter, SEC "Form D" is the document, as adopted by the SEC entitled "Form D, Notice of Exempt Offering of Securities."

D. Pursuant to § 13.1-514 B 13 of the Act, an agent of an issuer who effects transactions in a security exempt from registration under the Securities Act of 1933 pursuant to rules and regulations promulgated under § 4(2) thereof (15 USC § 77d(2)) is exempt from the agent registration requirements of the Act.

E. Should the filing not be timely made in accordance with subsection A of this section, in addition to the filing fee set forth in subsection A of this section, a late charge of $250 will be assessed if filed within 90 days of the filing deadline, $500 if filed within six months of the filing deadline, and $750 if filed more than six months of the filing deadline.

21VAC5-45-30. Federal Regulation A Tier 2 offerings.

A. An issuer planning to offer and sell securities in this Commonwealth in an offering exempt under Tier 2 of federal Regulation A (17 CFR 230.251 through 17 CFR 230.263) and § 18(b)(3) or 18(b)(4) of the Securities Act of 1933 (15 USC § 77a) shall submit the following at least 21 calendar days prior to the initial sale in this Commonwealth:

1. A completed Regulation A – Tier 2 notice filing form or copies of all documents filed with the U.S. Securities and Exchange Commission;

2. A consent to service of process on Form U-2 if not filing on the Regulation A – Tier 2 notice filing form; and

3. A filing fee of $500 payable the Treasurer of Virginia.

B. The initial notice filing is effective for 12 months from the date of the filing with this Commonwealth. For each additional 12-month period in which the same offering is continued, an issuer conducting a Tier 2 offering under federal Regulation A may renew its notice filing by filing the following on or before the expiration of the notice filing:

1. The Regulation A – Tier 2 notice filing form marked "renewal" or a cover letter or other document requesting renewal; and

2. A renewal fee in the amount of $250 payable to the Treasurer of Virginia.

C. An issuer may increase the amount of securities offered in this Commonwealth by submitting a Regulation A – Tier 2 notice filing form marked "amendment" or other document describing the transaction.

D. Should the filing not be timely made in accordance with subsection A of this section, in addition to the filing fee set forth in subsection A of this section, a late charge of $250 will be assessed if filed within 90 days of the initial sale in this Commonwealth, $500 if filed within six months of the initial sale, and $750 if filed more than six months after the initial sale.

21VAC5-100-10. Disclosure of confidential information.

A. This section governs the disclosure by the commission of information or documents obtained or prepared by any member, subordinate, or employee of the commission in the course of any examination or investigation conducted pursuant to the provisions of the Securities Act (§ 13.1-501 et seq. of the Code of Virginia). It is designed to implement the provisions of §§ 13.1-518 and 13.1-567 that permit disclosure of information to governmental and quasi-governmental entities approved by rule of the commission.

B. The Director of the Division of Securities and Retail Franchising or the director's designee is hereby authorized to disclose information to the entities enumerated in subsections D, E, and F of this section. Disclosure shall be made only for the purpose of aiding in the detection or prevention of possible violations of law or to further administrative, legislative, or judicial action resulting from possible violations of law. As a condition precedent to disclosure, a writing shall be obtained from the receiving entity undertaking that it will exercise reasonable measures to preserve the confidential nature of the information.

C. Disclosure may be made only under the following circumstances:

1. In response to an entity's request for information relating to a specific subject or person.

2. By disseminating to an entity information which that may indicate a possible violation of law within the administrative, regulatory, or enforcement responsibility of that entity.

3. To participate in a centralized program or system designed to collect and maintain information pertaining to possible violations of securities, investment advisory, retail franchising, or related laws.

4. To the extent necessary for participation in coordinated examinations or investigations.

D. The following are approved governmental entities (including any agencies, bureaus, commissions, divisions, or successors thereof) of the United States:

1. Board of Governors of the Federal Reserve System or any Federal Reserve Bank.

2. Commodity Futures Trading Commission.

3. Congress of the United States, including either House, or any committee or subcommittee thereof.

4. Department of Defense.

5. Department of Housing and Urban Development.

6. Department of Justice.

7. Department of Treasury.

8. Federal Deposit Insurance Corporation.

9. Office of Thrift Supervision.

10. Federal Trade Commission.

11. Postal Service.

12. Securities and Exchange Commission.

13. Comptroller of the Currency.

14. Federal Bureau of Investigation.

15. Department of Homeland Security.

16. Office of the Inspector General.

17. Any other federal agency or instrumentality which that demonstrates a need for access to confidential information.

16. Virginia General Assembly, including the House or the Senate, or any committee or subcommittee thereof.

E. The following are approved nonfederal governmental entities:

1. Virginia General Assembly, including the House of Delegates or the Virginia Senate, or any committee or subcommittee thereof.

2. Any Virginia governmental agency or instrumentality that demonstrates a need for access to confidential information.

3. The securities or retail franchising regulatory entity of any state, territory, or possession of the United States, the District of Columbia, and the Commonwealth of Puerto Rico, state legislative bodies and state and local law-enforcement entities involved in the detection, investigation, or prosecution of violations of law.

2. 4. The securities or retail franchising regulatory entity of any foreign country, whether such entity is on a national, provincial, regional, state, or local level, and law-enforcement entities within such countries.

F. The following are approved quasi-governmental entities:

1. Municipal Securities Rulemaking Board.

2. National Association of Attorneys General.

3. NASAA.

4. Securities Investor Protection Corporation.

5. National White Collar Crime Center.

6. FINRA.

7. Any other quasi-governmental entity that demonstrates a need for access to confidential information.