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What if I Don’t File a Limited Offering Exemption Notice?

Banner for California Department of Business Oversight, where Limited Offering Exemption Notice is filedThis post is based on a question that I answered on Quora: What happens if you do not file a Limited Offering Exemption Notice in California?

Limited Offering Exemption Notice Requirement

I first addressed the Limited Offering Exemption Notice in Section 25102 (f) – Securities Law Compliance if You Incorporate in California. As that post explains, LOEN filing is required for corporate share issuances that are exempt from securities registration requirements in California.

Consequences of Failure to File

Consequences of failure to file a Limited Offering Exemption Notice include the following:

  • The Commissioner of Business Oversight may take “any action that the commissioner deems necessary or appropriate under this division with respect to the offer and sale of the securities”. Corporations Code Section 25102(f)(4) (emphasis added)
  • The Commissioner has the power to bring legal actions with a variety of possible outcomes. These include, for example, imposition of civil penalties and requiring that securities be evidenced by certificates having restrictive legends on them. Corporations Code Sections 25530-25536

A Limited Offering Exemption Notice can be filed quickly, easily and (generally) inexpensively. There is no reason to take the risks associated with LOEN noncompliance.

Dana H. Shultz, Attorney at Law  +1 510-547-0545  dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.

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