{"data":{"id":"us-ky/krs-292.410","jurisdiction":"us-ky","citation":"KRS 292.410","heading":"Exempt transactions -- Summary order denying or revoking exemption --","body":"Appeal.\n(1) Except as expressly provided, KRS 292.330 to 292.390 shall not apply to any of the\nfollowing transactions:\n(a) Any isolated nonissuer transaction, whether effected throu gh a broker -dealer\nor not;\n(b) Any nonissuer distribution of an outstanding security by a registered broker -\ndealer, if the security has a fixed maturity or a fixed interest or dividend\nprovision and there has been no default during the current fiscal year or within\nthe three (3) preceding fiscal years, or during the existence of the issuer and\nany predecessors if less than three (3) years, in the payment of principal,\ninterest, or dividends on the security;\n(c) Any nonissuer transaction effected by or throu gh a registered broker -dealer\npursuant to an unsolicited order or offer to buy; but the commissioner may by\nrule require that the customer acknowledge upon a specified form that the sale\nwas unsolicited, and that a signed copy of each such form be preserve d by the\nbroker-dealer for a specified period;\n(d) Any transaction between the issuer or other person on whose behalf the\noffering is made and an underwriter, or among underwriters;\n(e) Any transaction in a bond or other evidence of indebtedness secured by  a real\nor chattel first mortgage or deed of trust, or by an agreement for the sale of\nreal estate or chattels, if the entire mortgage, deed of trust, or agreement,\ntogether with all the bonds or other evidences of indebtedness secured\nthereby, is offered and sold as a unit;\n(f) Any transaction by an executor, administrator, sheriff, marshal, receiver,\ntrustee in bankruptcy, guardian, or conservator;\n(g) Any transaction executed by a bona fide pledgee without any purpose of\nevading this chapter;\n(h) Any off er or sale to a bank, savings institution, trust company, insurance\ncompany, investment company as defined in the Investment Company Act of\n1940, 15 U.S.C. secs. 80a -1 et seq., pension or profit -sharing trust, or other\nfinancial institution or institutiona l buyer, or to a broker -dealer, whether the\npurchaser is acting for itself or in some fiduciary capacity;\n(i) The offer or sale of a security by the issuer of the security if all of the\nfollowing conditions are met:\n1. The issuer does not offer or sell the  securities by means of a form of\ngeneral advertisement or general solicitation. The following shall not\nconstitute general solicitation within the meaning of this section:\na. Solicitation of indications of interest in accordance with the terms\nand conditions as the commissioner may adopt by rule; or\nb. Offers to sell securities and the dissemination of written offering\nmaterials in accordance with the terms of this section at least thirty\n(30) days after the withdrawal of an application by the issuer to\nregister the same class of securities;\n2. The issuer reasonably believes that each purchaser of the securities is\nacquiring the securities for investment and is aware of any restrictions\nimposed on transferability and resale of the securities. The basis for\nreasonable belief may include:\na. Obtaining a written representation signed by the purchaser that the\npurchaser is acquiring the securities for the purchaser's own\ninvestment and is aware of any restrictions imposed on the\ntransferability and resale of the securities; and\nb. Placement of a legend on the certificate or other document that\nevidences the securities stating that the securities have not been\nregistered under this chapter, and setting forth or referring to the\nrestrictions on transferability and sale of the securities; and\n3. The transaction satisfies one (1) of the following conditions:\na. Each purchaser has access to all the material facts with respect to\nthe securities by reason of the purchaser's active involvement in\nthe organization or mana gement of the issuer or the purchaser's\nfamily relationship with a person actively involved in the\norganization or management of the issuer;\nb. There are not more than fifteen (15) purchasers in Kentucky\ndescribed in subdivision a. of this subparagraph, pl us an unlimited\nnumber of purchasers who are \"accredited investors\" as defined by\nRule 501 of the Securities Act of 1933, 17 C.F.R. sec. 230.501; or\nc. The aggregate offering price of the securities, including securities\nsold outside of Kentucky, does not exceed one million dollars\n($1,000,000), the total number of purchasers who are not\naccredited investors, including purchasers outside of Kentucky,\ndoes not exceed thirty-five (35), and each purchaser either receives\nall of the material facts with respect to the decision to invest in the\nsecurity;\n4. Persons receiving commissions, finders' fees, or other remuneration in\nconnection with sales of securities in reliance on this subsection shall be\nregistered as a broker -dealer or agent under this chapter unles s exempt\nfrom registration;\n5. The commissioner may by rule deny the exemption provided in this\nsubsection to a particular class of issuers or may make the exemption\navailable to the issuers upon compliance with additional conditions and\nrequirements, if appropriate in furtherance of the intent of this chapter;\n6. The commissioner may, by order, increase the maximum number of\npurchasers or the maximum offering amount provided in paragraph 3.c.\nof this subsection upon request if the commissioner determines t hat any\nsuch increase is necessary or appropriate in the public interest or for the\nprotection of investors. Any request to increase either or both of the\nconditions shall be made in writing to the commissioner before any sale\nin reliance on the requested increase and shall be accompanied by the\nfollowing:\na. A statement of the amount of the increase in the maximum\noffering amount or in the number of purchasers being requested,\nand the issuer's reasons for requesting the increase;\nb. A copy of any offering circular or other written materials being\ndistributed to prospective purchasers;\nc. A copy of the written representation and legend serving as the\nissuer's basis for reasonable belief of a purchaser's investment\nintent and awareness of restrictions on the transferability and resale\nof the security being acquired; and\nd. A filing fee of two hundred fifty dollars ($250);\n(j) Any offer or sale of a preorganization certificate or subscription, if:\n1. No commission or other remuneration is paid or given directly  or\nindirectly for soliciting any prospective subscriber;\n2. The number of subscribers does not exceed twenty-five (25); and\n3. No payment is made by any subscriber;\n(k) Any transaction pursuant to an offer to existing security holders of the issuer,\nincluding persons who at the time of the transaction are holders of convertible\nsecurities, nontransferable warrants, or transferable warrants exercisable\nwithin not more than ninety (90) days of their issuance, if no commission or\nother remuneration is paid or  given directly or indirectly, except to a broker -\ndealer registered under this chapter, for soliciting any security holder in this\nstate;\n(l) Any offer of a security for which registration statements have been filed under\nboth this chapter and the Securities Act of 1933, 15 U.S.C. secs. 77a et seq., if\nno stop order or refusal order is in effect and no public proceeding or\nexamination looking toward such an order is pending under either act;\n(m) The issuance of any stock dividend, whether the corporation di stributing the\ndividend is the issuer of the stock or not, if nothing of value is given by\nstockholders for the distribution other than the surrender of a right to a cash\ndividend where the stockholder can elect to take a dividend in cash or stock;\n(n) Any transaction incident to a right of conversion or a statutory or judicially -\napproved reclassification, recapitalization, reorganization, quasi\nreorganization, stock split, reverse stock split, merger, consolidation, or sale\nof assets;\n(o) Any transaction by a person who does not control, and is not controlled by or\nunder common control with, the issuer if:\n1. The transaction is at a price reasonably related to the current market\nprice;\n2. The security is registered under Section 12 of the Securities Exchang e\nAct of 1934, 15 U.S.C. sec. 78l, and the issuer files reports pursuant to\nSection 13 of that act, 15 U.S.C. sec. 78m; and\n3. Copies of such federal registration statements, reports, forms or exhibits\nas the commissioner may by rule or order require are f iled with the\ncommissioner;\n(p) Any transaction by a person who may control, or may be controlled by or\nunder common control with, the issuer if:\n1. The transaction is at a price reasonably related to the current market\nprice;\n2. The security is registered under Section 12 of the Securities Exchange\nAct of 1934, 15 U.S.C. sec. 78l, and the issuer files reports pursuant to\nSection 13 of that act, 15 U.S.C. sec. 78m;\n3. Copies of such federal registration statements, forms, reports, or exhibits\nas the commissioner may by rule or order require are filed with the\ncommissioner; and\n4. Such sales by any such person comply with such rules as the\ncommissioner may prescribe; or\n(q) Any transaction for which the commissioner by rule or order finds that\nregistration is not necessary or appropriate in the public interest or for the\nprotection of investors.\n(2) The commissioner may by order deny or revoke the exemption specified in KRS\n292.400(6), (9), or (12) or in this section with respect to a  specific security or\ntransaction. No such order may be entered without appropriate prior notice to all\ninterested parties, opportunity for hearing, and written findings of fact and\nconclusions of law in accordance with KRS Chapter 13B.\n(3) The commissione r may by order summarily deny or revoke any of the specified\nexemptions pending final determination of any proceeding under this section where\nthe commissioner determines that a person has engaged, is engaging, or is about to\nengage in an act, practice, or  course of conduct constituting a violation of this\nchapter or administrative regulation promulgated, or order issued pursuant to this\nchapter, or that a person has materially aided, is materially aiding, or is about to\nmaterially aid an act, practice, or course of conduct constituting a violation of this\nchapter, an administrative regulation promulgated pursuant to this chapter, or an\norder issued under this chapter. Any person aggrieved by an order of the\ncommissioner under this section may file an applic ation for an emergency hearing\npursuant to KRS 13B.125. The commissioner shall comply with KRS 13B.125\nwhen entering a summary order. The commissioner may modify, stay, extend, or\nvacate any summary order issued under this section.\n(4) An order issued under this section shall not operate retroactively. No person shall be\nconsidered to have violated this chapter by reason of any offer or sale effected after\nthe entry of an order under this subsection if he sustains the burden of proof that he\ndid not know, a nd in the exercise of reasonable care could not have known of the\norder. In any proceeding under this chapter, the burden of proving an exemption\nfrom a definition is upon the person claiming it.","path":["KRS Chapter 292"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=15555","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:57:23Z","sha256":"ae7e13a5d403bb3da5ebf35cd0b25fed94659841873891e56dce5ee533b45777","source_id":"us-ky","stale":false,"prev":"us-ky/krs-292.400","next":"us-ky/krs-292.411"},"notice":"GroundRules: Original legal text. Not legal advice."}