Iowa Statement or Legend on Stock Certificate - Notice of Restriction on Transfer - Stock not Registered - Intrastate Exemption

• Category: Corporations - Shareholders and Stock
• State: Multi-State
• Control #: US-1057BG
• Format: Word; Rich Text

Description

A Legend is a statement on a stock certificate noting restrictions on the transfer of the stock, often due to SEC requirements for unregistered securities. The Securities Act of 1933 regulates the initial sale of securities to the public. Some securities are exempt from coverage of the Act. Certain stock issue transactions are also exempt (i.e., exempt from registration with the Securities and Exchange Commission). The most common exempt transaction that close corporations take advantage of is the intrastate offering. To qualify for this exemption, both the investors and the issuer must all be residents of the same state. The issuer must also meet the following requirements: • 80% of its assets must be located in the state; • 80% of its income must be earned from operations within the state; and • 80% of the proceeds from the sale must be used on operations within the state. Also, for nine months after the issuance, the stock can only be sold to state residents. Iowa Statement or Legend on Stock Certificate — Notice of Restrictiotransfereefe— - Stock not Registered — Intrastate Exemption In the state of Iowa, when a company issues stock certificates to its shareholders, it may include a specific statement or legend known as the "Iowa Statement" or "Iowa Legend." This statement serves as a notice of restriction on the transfer of the stock and indicates that the stock is not registered for public trading. The inclusion of this legend is particularly relevant for stocks that fall under an intrastate exemption. The Iowa Statement or Legend serves as a legal requirement and disclosure mechanism, informing investors and potential buyers of specific restrictions placed on the stock's transferability. It is crucial for both the company issuing the stock and the individual shareholders to understand the implications associated with this legend. The restrictions mentioned in the Iowa Statement can vary depending on the type of exemption the stock falls under. While there might be additional variations, some common types of Iowa Statements or Legends on Stock Certificates include: 1. Notice of Restriction on Transfer — Rule 147: This legend indicates that the stock is subject to restrictions on its transferability under Rule 147 of the Securities Act of 1933. Rule 147 establishes the requirements for a company to qualify for intrastate exemption, allowing it to sell securities solely within the state where it is incorporated and operates. Therefore, this type of legend signifies that the stock can only be transferred within Iowa. 2. Notice of Restriction on Transfer — Rule 147A: Similar to the Rule 147 legend, this legend signifies that the stock is subject to transfer restrictions under Rule 147A. Rule 147A is an updated version of Rule 147, providing more flexibility in terms of intrastate offerings and allowing for electronic advertising and offerees that are not state residents. Again, this legend notifies holders that the stock can only be transferred within Iowa. 3. Notice of Restriction on Transfer — Other Intrastate Exemptions: In addition to Rule 147 and Rule 147A, there might be other intrastate exemptions applicable in the state of Iowa that can vary based on specific circumstances and regulations. These legends will specify the relevant exemption under which the stock is being issued and define the transfer restrictions accordingly. It is important to note that the inclusion of the Iowa Statement or Legend on a stock certificate serves as a caution to potential buyers, highlighting that the stock has not been registered for public trading and can only be transferred within the state boundaries. This restriction aims to protect the interests of both the issuing company and the shareholders, ensuring compliance with securities laws and regulations. Before engaging in any transactions involving the stock, it is advisable for all parties involved to thoroughly understand the implications of the Iowa Statement or Legend and consult legal and financial professionals if necessary.

Iowa Statement or Legend on Stock Certificate — Notice of Restrictiotransfereefe— - Stock not Registered — Intrastate Exemption In the state of Iowa, when a company issues stock certificates to its shareholders, it may include a specific statement or legend known as the "Iowa Statement" or "Iowa Legend." This statement serves as a notice of restriction on the transfer of the stock and indicates that the stock is not registered for public trading. The inclusion of this legend is particularly relevant for stocks that fall under an intrastate exemption. The Iowa Statement or Legend serves as a legal requirement and disclosure mechanism, informing investors and potential buyers of specific restrictions placed on the stock's transferability. It is crucial for both the company issuing the stock and the individual shareholders to understand the implications associated with this legend. The restrictions mentioned in the Iowa Statement can vary depending on the type of exemption the stock falls under. While there might be additional variations, some common types of Iowa Statements or Legends on Stock Certificates include: 1. Notice of Restriction on Transfer — Rule 147: This legend indicates that the stock is subject to restrictions on its transferability under Rule 147 of the Securities Act of 1933. Rule 147 establishes the requirements for a company to qualify for intrastate exemption, allowing it to sell securities solely within the state where it is incorporated and operates. Therefore, this type of legend signifies that the stock can only be transferred within Iowa. 2. Notice of Restriction on Transfer — Rule 147A: Similar to the Rule 147 legend, this legend signifies that the stock is subject to transfer restrictions under Rule 147A. Rule 147A is an updated version of Rule 147, providing more flexibility in terms of intrastate offerings and allowing for electronic advertising and offerees that are not state residents. Again, this legend notifies holders that the stock can only be transferred within Iowa. 3. Notice of Restriction on Transfer — Other Intrastate Exemptions: In addition to Rule 147 and Rule 147A, there might be other intrastate exemptions applicable in the state of Iowa that can vary based on specific circumstances and regulations. These legends will specify the relevant exemption under which the stock is being issued and define the transfer restrictions accordingly. It is important to note that the inclusion of the Iowa Statement or Legend on a stock certificate serves as a caution to potential buyers, highlighting that the stock has not been registered for public trading and can only be transferred within the state boundaries. This restriction aims to protect the interests of both the issuing company and the shareholders, ensuring compliance with securities laws and regulations. Before engaging in any transactions involving the stock, it is advisable for all parties involved to thoroughly understand the implications of the Iowa Statement or Legend and consult legal and financial professionals if necessary.