                                 CODE OF VIRGINIA

EXEMPTIONS (§ 13.1-514)

A. The following securities are exempted from the securities registration
requirements of this chapter:

   1. Any security (including a revenue obligation) issued or guaranteed by the
   United States, any state, any political subdivision of a state or any agency
   or corporate or other instrumentality of one or more of the foregoing; or any
   certificate of deposit for any of the foregoing;

   2. Any security issued or guaranteed by Canada, any Canadian province, any
   political subdivision of any such province, any agency or corporate or other
   instrumentality of one or more of the foregoing or any other foreign
   government with which the United States currently maintains diplomatic
   relations, if the security is recognized as a valid obligation by such issuer
   or guarantor;

   3. Any security issued by and representing an interest in or a debt of, or
   guaranteed by, the International Bank for Reconstruction and Development, or
   any national bank, or any bank or trust company organized under the laws of
   any state or trust subsidiary organized under the provisions of Article 3
   (&#xA7; 6.2-1047 et seq.) of Chapter 10 of Title 6.2;

   4. Any security issued by and representing an interest in or a debt of, or
   guaranteed by, any federal savings and loan association or savings bank, or by
   any savings and loan association or savings bank which is organized under the
   laws of this Commonwealth;

   5. Any security issued or guaranteed by an insurance company licensed to
   transact insurance business in this Commonwealth;

   6. Any security issued by any credit union, industrial loan association or
   consumer finance company which is organized under the laws of this
   Commonwealth and is supervised and examined by the Commission;

   7. Any security issued or guaranteed by any railroad, other common carrier or
   public service company supervised as to its rates and the issuance of its
   securities by a governmental authority of the United States, any state, Canada
   or any Canadian province;

   8. Any security which is listed or approved for listing upon notice of
   issuance on the New York Stock Exchange or the American Stock Exchange or any
   other security of the same issuer which is of senior or substantially equal
   rank; any security called for by subscription rights or warrants admitted to
   trading in any of said exchanges; or any warrant or right to subscribe to any
   of the foregoing securities;

   9. Any commercial paper which arises out of a current transaction or the
   proceeds of which have been or are to be used for current transactions, and
   which evidences an obligation to pay cash within nine months after the date of
   issuance, exclusive of days of grace, or any renewal thereof which is likewise
   limited, or any guaranty of such paper or of any such renewal;

   10. Any security issued in connection with an employee&#8217;s stock purchase,
   savings, pension, profit-sharing or similar benefit plan. The Commission may
   by rule or order, as to any security issued pursuant to such plan, specify or
   designate persons eligible to participate in such plan;

   11. Any security issued by a cooperative association organized as a
   corporation under the laws of this Commonwealth;

   12. Any security listed on an exchange registered with the U.S. Securities and
   Exchange Commission or quoted on an automated quotation system operated by a
   national securities association registered with the U.S. Securities and
   Exchange Commission and approved by regulations of the State Corporation
   Commission;

   13. Any security issued by any issuer organized under the laws of any foreign
   country and approved by rule or regulation of the Commission.

B. The following transactions are exempted from the securities, broker-dealer
and agent registration requirements of this chapter except as expressly provided
in this subsection:

   1. Any isolated transaction by the owner or pledgee of a security, whether
   effected through a broker-dealer or not, which is not directly or indirectly
   for the benefit of the issuer;

   2. Any nonissuer distribution by a registered broker-dealer and its registered
   agent of a security that has been outstanding in the hands of the public for
   the past five years, if the issuer in each of the past three fiscal years has
   lawfully paid dividends on its common stock aggregating at least four percent
   of its current market price;

   3. Any transaction by a registered broker-dealer and its registered agent
   pursuant to an unsolicited order or offer to buy;

   4. Any transaction in a bond or other evidence of indebtedness secured by a
   real or chattel mortgage or deed of trust or by an agreement for the sale of
   real estate or chattels, if the entire indebtedness secured thereby is offered
   and sold as a unit;

   5. Any transaction in his official capacity by a receiver, trustee in
   bankruptcy or other judicially appointed officer selling securities pursuant
   to court order;

   6. Any offer or sale to a corporation, investment company or pension or
   profit-sharing trust or to a broker-dealer;

   7. a. Any sale of its securities by an issuer or any sale of securities by a
   registered broker-dealer and its registered agent acting on behalf of an
   issuer if, after the sale, such issuer has not more than 35 security holders,
   and if its securities have not been offered to the general public by
   advertisement or solicitation; or
   				b. To the extent the Commission by rule or order permits, any sale of its
   securities by an issuer or any sale of securities by a registered
   broker-dealer and its registered agent acting on behalf of an issuer to not
   more than 35 persons in the Commonwealth during any period of 12 consecutive
   months, whether or not the issuer or any purchaser is then present in the
   Commonwealth, if the issuer or broker-dealer reasonably believes that all the
   purchasers in the Commonwealth are purchasing for investment, and if the
   securities have not been offered to the general public by advertisement or
   general solicitation. The Commission may, by rule or order, as to any security
   or transaction or any type of security or transaction, withdraw or further
   condition this exemption, increase or decrease the number of purchasers
   permitted, or waive the condition relating to their investment intent. The
   Commission may assess and collect in connection with any filing pursuant to
   this exemption a nonrefundable fee not to exceed $250.
   				With respect to this subdivision 7, and except to the extent the
   Commission by rule or order may otherwise permit, the number of security
   holders of an issuer or the number of purchasers from an issuer, as the case
   may be, shall not be deemed to include the security holders of any other
   corporation, partnership, limited liability company, unincorporated
   association or trust unless it was organized to raise capital for the issuer.
   Notwithstanding the provisions of subdivision 15, the merger or consolidation
   of corporations, partnerships, limited liability companies, unincorporated
   associations or other entities shall be a violation of this chapter if the
   surviving or new entity has more than 35 security holders or purchasers and
   all the securities of the parties thereto were issued under this exemption,
   unless all of the parties thereto have been engaged in transacting business
   for more than two years prior to the merger or consolidation;

   8. Any transaction pursuant to an offer to existing security holders of the
   issuer including holders of transferable warrants issued to existing security
   holders and exercisable within 90 days of their issuance, if either (i) no
   commission or other remuneration (other than a standby commission) is paid or
   given directly or indirectly for soliciting any security holder in this
   Commonwealth or (ii) the issuer first notifies the Commission in writing of
   the terms of the offer and the Commission does not by order disallow the
   exemption within five full business days after the date of the receipt of the
   notice;

   9. Any offer (but not a sale) of a security for which registration statements
   have been filed, but are not effective, under both this chapter and the
   Securities Act of 1933; but this exemption shall not apply while a stop order
   is in effect or, after notice to the issuer, while a proceeding or examination
   looking toward such an order is pending under either act;

   10. The issuance of not more than three shares of common stock to one or more
   of the incorporators of a corporation and the initial transfer thereof;

   11. Sales of an issue of bonds, aggregating $150,000 or less, secured by a
   first lien deed of trust on realty situated in Virginia, to 30 persons or less
   who are residents of Virginia;

   12. Any offer or sale of any interest in any partnership, corporation,
   association or other entity created solely to provide residential housing
   located in the Commonwealth, provided that such offer or sale is by the issuer
   or by a real estate broker or real estate agent duly licensed in Virginia;

   13. The Commission is authorized to create by rule a limited offering
   exemption, the purpose of which shall be to further the objectives of
   compatibility with similar exemptions from federal securities regulation and
   uniformity among the states; providing that such rule shall not exempt
   broker-dealers or agents from the registration requirements of this chapter,
   except in the case of an agent of the issuer who either (i) receives no sales
   commission directly or indirectly for offering or selling the securities or
   (ii) effects transactions in a security exempt from registration under the
   Securities Act of 1933 pursuant to rules and regulations promulgated under
   &#xA7; 4(2) thereof. Any filing made with the Commission pursuant to any
   exemption created under this subdivision shall be accompanied by a $250 fee;

   14. The issuance of any security dividend, whether the corporation
   distributing the dividend is the issuer of the security or not, if nothing of
   value is given by stockholders for the distribution other than the surrender
   of a right to a cash dividend where the stockholder can elect to take a
   dividend in cash or in a security;

   15. Any transaction incident to a right of conversion or a statutory or
   judicially approved reclassification, recapitalization, reorganization,
   quasi-reorganization, stock split, reverse stock split, merger, consolidation,
   sale of assets, or exchange of securities;

   16. Any offer or sale of a security issued by a Virginia church if the offer
   and sale are only to its members and the security is offered and sold only by
   its members who are Virginia residents and who do not receive remuneration or
   compensation directly or indirectly for offering or selling the security;

   17. Any offer or sale of securities issued by a professional business entity
   (as defined in subsection A of &#xA7; 13.1-1102) to a person licensed or
   otherwise legally authorized to render within this Commonwealth the same
   professional services (as defined in subsection A of &#xA7; 13.1-1102)
   rendered by the professional business entity. Notwithstanding the foregoing,
   nothing in this subdivision shall be deemed to provide that shares of stock,
   partnership or membership interests or other representations of ownership in a
   professional business entity are securities except to the extent otherwise
   provided by subsection A of this section;

   18. Any offer that is communicated on the Internet, World Wide Web or similar
   proprietary or common carrier electronic system and that is in compliance with
   requirements prescribed by rule or order of the Commission;

   19. To the extent the Commission by rule or order permits, any offer or sale
   to an accredited investor, as defined by the Commission, if the issuer
   reasonably believes before the sale that the accredited investor, either alone
   or with the accredited investor&#8217;s representative, has such knowledge and
   experience in financial and business matters as to be capable of evaluating
   the merits and risks of the prospective investment. The Commission may assess
   and collect in connection with any filing pursuant to this exemption a
   nonrefundable fee not to exceed $250;

   20. Any transaction by a bank pursuant to an unsolicited offer or order to buy
   or sell any security, provided such transaction is not effected by an employee
   of the bank who is also an employee of a broker-dealer;

   21. To the extent the Commission by rule or order permits, any security issued
   by an entity if:
   				a. The offering of the security is conducted in accordance with §
   3(a)(11) of the Securities Act of 1933 and Rule 147 adopted under the
   Securities Act of 1933 or the U.S. Securities and Exchange Commission&#8217;s
   Rule 147A;
   				b. The offer and sale of the security are made only to residents of
   Virginia. However, for an offering conducted in accordance with the U.S.
   Securities and Exchange Commission&#8217;s Rule 147A, the offer may be made
   accessible to residents outside of Virginia provided that the sale of the
   security is made only to residents of Virginia;
   				c. The aggregate price of securities in an offering under this exemption
   does not exceed $2 million, which sum the Commission, by rule or order, may
   increase or decrease;
   				d. The total consideration paid by any purchaser of securities in an
   offering under this exemption does not exceed $10,000, unless the purchaser is
   an accredited investor as defined by Rule 501 of the U.S. Securities and
   Exchange Commission&#8217;s Regulation D (17 C.F.R. § 230.501). The
   Commission, by rule or order, may increase or decrease such limit on the total
   consideration to be paid by any purchaser of securities in an offering under
   this exemption;
   				e. No compensation is paid to employees, agents, or other persons for the
   solicitation of, or based on the sale of, securities in connection with an
   offering of securities under this exemption to any person who is not
   registered as a broker-dealer or agent, except to the extent permitted by rule
   or order of the Commission;
   				f. Neither the issuer nor any person related to the issuer is subject to
   disqualification as established by the Commission by rule or order; and
   				g. The security is sold in an offering conducted in compliance with any
   conditions established by rule or order of the Commission, which may include:

      1. Restrictions on the nature of the issuer;

      2. Limitations on the number and manner of offerings;

      3. Disclosures required to be provided to investors, including disclosures
      of risk factors related to the issuer and the offering;

      4. Requirements that all proceeds received from purchasers be placed in
      escrow in a depository institution located in the Commonwealth until the
      minimum amount of the offering is raised;

      5. Filings with the Commission of notices and other materials related to the
      offering;

      6. Requirements regarding the preparation and submission of the
      issuer&#8217;s financial statements, including (i) the form and content of
      such statements and (ii) whether such statements are required to be audited
      or reviewed by an independent certified public accountant in accordance with
      generally accepted accounting principles; and

      7. Requirements that the entity issuing the security is formed, organized,
      or existing under the laws of the Commonwealth. However, for an offering
      conducted in accordance with the U.S. Securities and Exchange
      Commission&#8217;s Rule 147A, the entity issuing the security may be formed
      or organized outside the Commonwealth, provided that the entity has its
      principal place of business in the Commonwealth and satisfies at least one
      of the doing business requirements in 17 C.F.R. &#xA7; 230.147A (c) 2.
      					The Commission may assess and collect in connection with any filing
      pursuant to this exemption a nonrefundable fee in an amount to be set by the
      Commission by rule or order, provided such amount shall not exceed $500;

   22. Any offer or sale of securities conducted in accordance with Tier 2 of
   federal Regulation A (17 CFR 230.251 to 230.263) promulgated under &#xA7;
   3(b)(2) of the Securities Act of 1933 (U.S. Securities and Exchange Commission
   Release No. 33-9741, 80 Fed. Reg. 21806) to the extent such securities are
   preempted from the registration requirements of this chapter pursuant to Tier
   2 of federal Regulation A. The Commission shall by rule or order prescribe any
   filings with the Commission of notices, renewals, and other materials. The
   Commission may assess and collect in connection with any filing pursuant to
   this exemption a nonrefundable filing fee not to exceed $500. The Commission
   shall provide information on its website regarding the differences between the
   exemption provided pursuant to this subdivision and the exemption provided
   pursuant to subdivision 21; and

   23. Any nonissuer distribution by or through a registered broker-dealer and
   its registered agent of a security that is included in an electronic exchange,
   marketplace, system, or disclosure repository, which exchange, marketplace,
   system, or disclosure repository (i) makes information freely available to the
   public, (ii) is registered under the Securities Exchange Act of 1934 or rules
   promulgated thereunder, or (iii) is an Alternative Trading System regulated by
   the U.S. Securities and Exchange Commission, and is approved by regulations of
   the State Corporation Commission.

C. In any proceeding under this chapter, the burden of proving an exemption
shall be upon the person claiming it.

HISTORY: Code 1950, § 13-113; 1956, c. 428; 1966, c. 186; 1970, c. 286; 1972,
c. 683; 1974, cc. 86, 830; 1975, cc. 75, 500; 1976, c. 656; 1977, c. 111; 1978,
c. 397; 1981, cc. 347, 356, 362; 1982, c. 262; 1983, cc. 231, 516; 1984, cc.
298, 771; 1989, c. 388; 1990, c. 6; 1991, c. 223; 1993, c. 75; 1995, cc. 208,
213, 235; 1996, c. 16; 1997, cc. 279, 538; 1999, c. 92; 2001, c. 722; 2003, c.
595; 2007, c. 457; 2015, cc. 354, 400; 2016, c. 260; 2020, cc. 256, 279, 331.