Title 808 | Chapter 010 | Regulation 501
SUPERSEDED
This document is no longer current.
PUBLIC PROTECTION CABINET
Department of Financial Institutions
(New Administrative Regulation)
808 KAR 10:501.Required forms, fees, filing procedures, and recordkeeping requirements for persons operating pursuant to KRS 292.411 and KRS 292.412, the Kentucky Intrastate Crowdfunding Exemption; and notice filing requirements for federal crowdfunding offerings.
Section 1.
Definitions.(1)
"Commissioner" is defined by KRS 292.310(4).(2)
"Completion of an offering" means the occurrence of one (1) of the following:(a)
The date upon which the offering deadline expires;(b)
The date upon which the transaction becomes void pursuant to KRS 292.411(1)(i); or(c)
If the offering is closed prior to the offering deadline pursuant to KRS 292.411(k), the date of early closing.(3)
"Internet Web site operator" means a person registered as an Internet Web site operator pursuant to KRS 292.412.Section 2.
Issuer Notice Filings. An issuer making a notice filing pursuant to KRS 292.411(1)(f) shall complete and submit the following:(1)
Form CF 1, Kentucky Intrastate Crowdfunding Exemption Issuer Notice Filing Form with all required attachments;(2)
Form CF 2, Final Report of Sales Form no later than thirty (30) days after the completion of an offering conducted pursuant to KRS 292.411; and(3)
A filing fee of $500.Section 3.
Registration of Internet Web Site Operators.(1)
A person applying for registration as an Internet Web site operator shall complete and submit the following:(a)
Form CF 3, Internet Web Site Operator Registration Form with all required attachments;(b)
Form CF 4, Internet Web Site Operator Surety Bond Form; and(c)
A filing fee of $250.(2)
An Internet Web site operator applying to renew its registration for the following calendar year pursuant to KRS 292.412(6) shall complete and submit the following between December 1 and December 15 of the preceding calendar year:(a)
Form CF 3, Internet Web Site Operator Registration Form with all required attachments; and(b)
A renewal fee of $250.(3)
Except as provided in subsection (4) of this section, an initial registration shall be effective until December 31 of the year in which the initial registration is approved by the commissioner.(4)
An initial registration approved after November 30 shall be effective until December 31 of the following calendar year.Section 4.
Broker-dealer Notice Filings.(1)
Form CF 5, Broker-Dealer Internet Web Site Operator Notice Filing Form shall be completed by a broker-dealer making a notice filing pursuant to KRS 292.412(2).(2)
A notice filing shall be filed before the broker-dealer operates an Internet Web site pursuant to KRS 292.411(1)(r).(3)
Except as provided in subsection (4) of this section, a notice filing made pursuant to this section shall be effective until December 31 of the year in which the filing is made.(4)
A notice filing made between December 1 and December 31 of the year in which a previous notice filing expires shall be effective for the subsequent calendar year.Section 5.
Recordkeeping Requirements.(1)
An issuer shall accurately make and keep the following books and records relating to any offer or sale made pursuant to KRS 292.411:(a)
All forms and documents that are required by KRS 292.411 or this administrative regulation to be filed with the commissioner;(b)
Evidence of residency from each purchaser in any offering made by the issuer as required by KRS 292.411(1)(o);(c)
Evidence of accredited investor status for each purchaser making an investment exceeding $10,000 as required by KRS 292.411(1)(e) and (o);(d)
Evidence reflecting all offers made by the issuer;(e)
Evidence reflecting all sales made by the issuer;(f)
Manually or electronically signed copies of all purchaser certifications as required by KRS 292.411(1)(n);(g)
All limited notices distributed in accordance with KRS 292.411(1)(r)7.;(h)
All notices of cancellation of commitment to invest pursuant to KRS 292.411(1)(j);(i)
All notices of closing of an offering prior to the offering deadline delivered pursuant to KRS 292.411(1)(k);(j)
Quarterly reports made pursuant to KRS 292.411(1)(t); and(k)
All other communications with purchasers in the offering.(2)
An Internet Web site operator shall accurately make and keep the following books and records:(a)
Records of fees received pursuant to KRS 292.412(4)(a);(b)
All agreements with issuers offering securities through the Internet Web site operator's Web site;(c)
All information provided to the Internet Web site operator by an issuer to establish that the issuer is organized under the laws of Kentucky and authorized to do business in Kentucky as required by KRS 292.411(1)(r)1.;(d)
Evidence reflecting the limitation of Web site access as required by KRS 292.411(1)(r)3.;(e)
All correspondence or other communications with issuers, prospective purchasers, or purchasers;(f)
All information made available through the Internet Web site relating to an offering; and(g)
Any other information provided by or through the Internet Web site operator to issuers, prospective purchasers, or purchasers.Section 6.
Kentucky Intrastate Crowdfunding Examination Fees. The fee for a routine examination of an Internet Web site operator shall be fifty (50) dollars per working hour. A fee shall not be charged for examination work by an examiner-trainee.Section 7.
Federal Crowdfunding Notice Filing Provisions.(1)
The following provisions apply to offerings made under Federal Regulation Crowdfunding (17 C.F.R § 227) and Sections 4(a)(6) and 18(b)(4)(C) of the Securities Act of 1933:(a)
For an issuer that either (1) has its principal place of business in this state or (2) sells fifty (50) percent or greater of the aggregate amount of the offering to residents of this state, the issuer shall file the following with the commissioner:1.
A completed Form U-CF, Uniform Notice of Federal Crowdfunding Offering form, or copies of all documents filed with the Securities and Exchange Commission;2.
A consent to service of process on Form U-2 if not filing on Form U-CF; and3.
A filing fee of $300;(b)
For an issuer that has its principal place of business in this state, the filings required under paragraph (a) of this subsection shall be filed with the commissioner when the issuer makes its initial Form C filing concerning the offering with the Securities and Exchange Commission; and(c)
For an issuer that does not have its principal place of business in this state, but where residents of this state have purchased fifty (50) percent or greater of the aggregate amount of the offering, the filing required under paragraph (a) of this subsection shall be filed when the issuer becomes aware that such purchases have met this threshold, and in no event later than thirty (30) days from the date of completion of the offering.(2)
The initial notice filing required under subsection (1) of this section is effective for twelve months from the date of the filing with the commissioner.(3)
For each additional twelve-month period in which the same offering is continued, an issuer conducting an offering under 17 C.F.R § 227 and Sections 4(a)(6) and 18(b)(4)(C) of the Securities Act of 1933 shall renew the initial notice filing required under subsection (1) of this section by filing the following on or before the expiration of the initial notice filing:(a)
A completed Form U-CF marked "renewal";(b)
A cover letter requesting renewal; and(c)
A renewal fee of $300.Section 8.
Incorporation by reference.(1)
The following material is incorporated by reference:(a)
"Form CF 1, Kentucky Intrastate Crowdfunding Exemption Issuer Notice Filing Form", September 2023;(b)
"Form CF 2, Final Report of Sales Form", September, 2023;(c)
"Form CF 3, Internet Web Site Operator Registration Form", September 2023;(d)
"Form CF 4, Internet Web Site Operator Surety Bond Form", September 2023; and(e)
"Form CF 5, Broker-Dealer Internet Web Site Operator Notice Filing Form", September 2023.(f)
"Form U-2, Uniform Consent to Service of Process, September 2023(g)
"Form U-CF, Uniform Notice of Federal Crowdfunding Offering", September 2023(2)
This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Department of Financial Institutions, 500 Mero St 2SW19, Frankfort, Kentucky 40601, Monday through Friday, 8 a.m. to 4:30 p.m. This material may also be obtained at kfi.ky.gov.JUSTIN BURSE, Acting Commissioner
RAY PERRY, Secretary
APPROVED BY AGENCY: September 14, 2023
FILED WITH LRC: September 15, 2023 at 11:00 a.m.
PUBLIC HEARING AND COMMENT PERIOD: A public hearing on this administrative regulation shall be held on November 21, 2023, at 9:00 a.m., at 500 Mero Street, Frankfort Kentucky 40601. Individuals interested in being heard at this hearing shall notify this agency in writing by five workdays prior to the hearing, of their intent to attend. If no notification of intent to attend the hearing was received by that date, the hearing may be cancelled. A transcript of the public hearing will not be made unless a written request for a transcript is made. If you do not wish to be heard at the public hearing, you may submit written comments to the Department on the proposed administrative regulation. Written comments shall be accepted through November 30, 2023. Send written notification of intent to be heard at the public hearing or written comments on the proposed administrative regulation to the contact persons.
CONTACT PERSON: Gary Stephens Asst. General Counsel, 500 Mero Street, 2 SW 19, Frankfort, Kentucky 40601, phone 502-782-9046, fax 502-573-8787, email Gary.Stephens@ky.gov.
REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT
Contact Person:
Gary Stephens
(1) Provide a brief summary of:
(a) What this administrative regulation does:
This regulation provides for required forms, fees, filing procedures, and recordkeeping requirements for persons operating pursuant to KRS 292.411 and KRS 292.412, the Kentucky Intrastate Crowdfunding Exemption; and Notice filing requirements for federal crowdfunding offerings.
(b) The necessity of this administrative regulation:
This administrative regulation is needed to establish the required forms, fees, filing procedures, and recordkeeping requirements for persons operating pursuant to KRS 292.411 and KRS 292.412, the Kentucky Intrastate Crowdfunding Exemption.
(c) How this administrative regulation conforms to the content of the authorizing statutes:
KRS 292.500(3) authorizes the commissioner of the Department of Financial Institutions to promulgate administrative regulations necessary to carry out the provisions of KRS Chapter 292. KRS 292.411(1)(f) and (s) require the commissioner to prescribe the notice filing form to be used, the filing fee to be paid, and the records to be kept by an issuer. KRS 292.412(2) requires the commissioner to prescribe the filing procedure and form to be used by registered broker-dealers operating an Internet Web site pursuant KRS 292.411(1)(r). KRS 292.412(3), (5), (6), (7), and (8) require the commissioner to prescribe filing procedures and forms for applications and renewal applications, the filing fees to be paid, the records to be kept, and the examination fees for Internet Web site operators.
(d) How this administrative regulation currently assists or will assist in the effective administration of the statutes:
This administrative regulation establishes the required forms, fees, filing procedures, and recordkeeping requirements for persons operating pursuant to KRS 292.411 and KRS 292.412, the Kentucky Intrastate Crowdfunding Exemption.
(2) If this is an amendment to an existing administrative regulation, provide a brief summary of:
(a) How the amendment will change this existing administrative regulation:
N/A
(b) The necessity of the amendment to this administrative regulation:
N/A
(c) How the amendment conforms to the content of the authorizing statutes:
N/A
(d) How the amendment will assist in the effective administration of the statutes:
N/A
(3) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation:
All business entities engaged in crowdfunding activities that require registration, or a qualified exemption from registration, under KRS Chapter 292. The number of entities engaged in this activity is undetermined at this time but is anticipated to be minimal.
(4) Provide an analysis of how the entities identified in question (3) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including:
(a) List the actions that each of the regulated entities identified in question (3) will have to take to comply with this administrative regulation or amendment:
The entity engaged in a crowdfunding offering will need to file the required applicable notice form with the Department along with a filing fee, as referenced in the statute and set by this regulation, of $300. The entity will need to notice file with the department every twelve months for renewal of the exemption of the active crowdfunding registration.
(b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (3):
The entities will be required to file an annual notice filing fee of $300.
(c) As a result of compliance, what benefits will accrue to the entities identified in question (3):
The entities will be exempt for registration with the department upon qualified notice filing with the department.
(5) Provide an estimate of how much it will cost the administrative body to implement this administrative regulation:
(a) Initially:
Costs to implement this regulation amendment will be incorporated into the current budget and will be minimal.
(b) On a continuing basis:
Costs for subsequent years will be incorporated into the department’s budget and will be minimal.
(6) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation:
Current department resources.
(7) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change if it is an amendment:
The department does not anticipate a need to increase fees or funding to implement this regulation.
(8) State whether or not this administrative regulation establishes any fees or directly or indirectly increases any fees:
There is a $300 filing fee for notice filing the exemption with the department. The controlling statute indicates a fee would be assessed and determined by the commissioner.
(9) TIERING: Is tiering applied?
Tiering was not applied. The regulation did not require tiering to be applied to implement.
FISCAL NOTE
(1) What units, parts, or divisions of state or local government (including cities, counties, fire departments, or school districts) will be impacted by this administrative regulation?
The Department of Financial Institutions
(2) Identify each state or federal statute or federal regulation that requires or authorizes the action taken by the administrative regulation.
KRS 292.500(3), 292.410, 292.411(1), and 292.412
(3) Estimate the effect of this administrative regulation on the expenditures and revenues of a state or local government agency (including cities, counties, fire departments, or school districts) for the first full year the administrative regulation is to be in effect.
The amended regulation should have no financial impact on state or local government agencies.
(a) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for the first year?
The effect on overall revenue for the Department will be minimal and will not have a substantial impact on the Department’s budget.
(b) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for subsequent years?
The amount of revenue generated in subsequent years is expected to be minimal to the Department.
(c) How much will it cost to administer this program for the first year?
The Department does not anticipate additional cost to implement this regulatory amendment.
(d) How much will it cost to administer this program for subsequent years?
The Department does not anticipate additional costs to implement this regulatory change in subsequent years.
Note: If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation.
Revenues (+/-):
Expenditures (+/-):
Other Explanation:
There will be minimal fiscal impact on the Department in terms of implementation or revenue based on the relatively small amount of the fee.
(4) Estimate the effect of this administrative regulation on the expenditures and cost savings of regulated entities for the first full year the administrative regulation is to be in effect.
(a) How much cost savings will this administrative regulation generate for the regulated entities for the first year?
Cost savings for the industry and the department will be achieved by timely filing of the notice. Therefore, costs savings to the entities will be determined by internal controls of the regulated entity.
(b) How much cost savings will this administrative regulation generate for the regulated entities for subsequent years?
Cost savings will be achieved by timely filing of the notice. Therefore, costs savings to the entities in subsequent years will be determined by internal controls of the regulated entity.
(c) How much will it cost the regulated entities for the first year?
The cost to the entity claiming the exemption will be dependent upon the timely filing of the notice forms and submission of the $300 filing fee.
(d) How much will it cost the regulated entities for subsequent years?
There will be a $300 fee for renewals of the exemption notice.
Note: If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation.
Cost Savings (+/-):
Expenditures (+/-):
Other Explanation:
The costs incurred to the regulated entity are directly related to their internal controls and filing of the exemption notice and filing fee.
(5) Explain whether this administrative regulation will have a major economic impact, as defined below.
"Major economic impact" means an overall negative or adverse economic impact from an administrative regulation of five hundred thousand dollars ($500,000) or more on state or local government or regulated entities, in aggregate, as determined by the promulgating administrative bodies. [KRS 13A.010(13)] The new regulation will not have a major economic impact on the regulated entities or the Department.
PUBLIC PROTECTION CABINET
Department of Financial Institutions
(New Administrative Regulation)
808 KAR 10:501.Required forms, fees, filing procedures, and recordkeeping requirements for persons operating pursuant to KRS 292.411 and KRS 292.412, the Kentucky Intrastate Crowdfunding Exemption; and notice filing requirements for federal crowdfunding offerings.
Section 1.
Definitions.(1)
"Commissioner" is defined by KRS 292.310(4).(2)
"Completion of an offering" means the occurrence of one (1) of the following:(a)
The date upon which the offering deadline expires;(b)
The date upon which the transaction becomes void pursuant to KRS 292.411(1)(i); or(c)
If the offering is closed prior to the offering deadline pursuant to KRS 292.411(k), the date of early closing.(3)
"Internet Web site operator" means a person registered as an Internet Web site operator pursuant to KRS 292.412.Section 2.
Issuer Notice Filings. An issuer making a notice filing pursuant to KRS 292.411(1)(f) shall complete and submit the following:(1)
Form CF 1, Kentucky Intrastate Crowdfunding Exemption Issuer Notice Filing Form with all required attachments;(2)
Form CF 2, Final Report of Sales Form no later than thirty (30) days after the completion of an offering conducted pursuant to KRS 292.411; and(3)
A filing fee of $500.Section 3.
Registration of Internet Web Site Operators.(1)
A person applying for registration as an Internet Web site operator shall complete and submit the following:(a)
Form CF 3, Internet Web Site Operator Registration Form with all required attachments;(b)
Form CF 4, Internet Web Site Operator Surety Bond Form; and(c)
A filing fee of $250.(2)
An Internet Web site operator applying to renew its registration for the following calendar year pursuant to KRS 292.412(6) shall complete and submit the following between December 1 and December 15 of the preceding calendar year:(a)
Form CF 3, Internet Web Site Operator Registration Form with all required attachments; and(b)
A renewal fee of $250.(3)
Except as provided in subsection (4) of this section, an initial registration shall be effective until December 31 of the year in which the initial registration is approved by the commissioner.(4)
An initial registration approved after November 30 shall be effective until December 31 of the following calendar year.Section 4.
Broker-dealer Notice Filings.(1)
Form CF 5, Broker-Dealer Internet Web Site Operator Notice Filing Form shall be completed by a broker-dealer making a notice filing pursuant to KRS 292.412(2).(2)
A notice filing shall be filed before the broker-dealer operates an Internet Web site pursuant to KRS 292.411(1)(r).(3)
Except as provided in subsection (4) of this section, a notice filing made pursuant to this section shall be effective until December 31 of the year in which the filing is made.(4)
A notice filing made between December 1 and December 31 of the year in which a previous notice filing expires shall be effective for the subsequent calendar year.Section 5.
Recordkeeping Requirements.(1)
An issuer shall accurately make and keep the following books and records relating to any offer or sale made pursuant to KRS 292.411:(a)
All forms and documents that are required by KRS 292.411 or this administrative regulation to be filed with the commissioner;(b)
Evidence of residency from each purchaser in any offering made by the issuer as required by KRS 292.411(1)(o);(c)
Evidence of accredited investor status for each purchaser making an investment exceeding $10,000 as required by KRS 292.411(1)(e) and (o);(d)
Evidence reflecting all offers made by the issuer;(e)
Evidence reflecting all sales made by the issuer;(f)
Manually or electronically signed copies of all purchaser certifications as required by KRS 292.411(1)(n);(g)
All limited notices distributed in accordance with KRS 292.411(1)(r)7.;(h)
All notices of cancellation of commitment to invest pursuant to KRS 292.411(1)(j);(i)
All notices of closing of an offering prior to the offering deadline delivered pursuant to KRS 292.411(1)(k);(j)
Quarterly reports made pursuant to KRS 292.411(1)(t); and(k)
All other communications with purchasers in the offering.(2)
An Internet Web site operator shall accurately make and keep the following books and records:(a)
Records of fees received pursuant to KRS 292.412(4)(a);(b)
All agreements with issuers offering securities through the Internet Web site operator's Web site;(c)
All information provided to the Internet Web site operator by an issuer to establish that the issuer is organized under the laws of Kentucky and authorized to do business in Kentucky as required by KRS 292.411(1)(r)1.;(d)
Evidence reflecting the limitation of Web site access as required by KRS 292.411(1)(r)3.;(e)
All correspondence or other communications with issuers, prospective purchasers, or purchasers;(f)
All information made available through the Internet Web site relating to an offering; and(g)
Any other information provided by or through the Internet Web site operator to issuers, prospective purchasers, or purchasers.Section 6.
Kentucky Intrastate Crowdfunding Examination Fees. The fee for a routine examination of an Internet Web site operator shall be fifty (50) dollars per working hour. A fee shall not be charged for examination work by an examiner-trainee.Section 7.
Federal Crowdfunding Notice Filing Provisions.(1)
The following provisions apply to offerings made under Federal Regulation Crowdfunding (17 C.F.R § 227) and Sections 4(a)(6) and 18(b)(4)(C) of the Securities Act of 1933:(a)
For an issuer that either (1) has its principal place of business in this state or (2) sells fifty (50) percent or greater of the aggregate amount of the offering to residents of this state, the issuer shall file the following with the commissioner:1.
A completed Form U-CF, Uniform Notice of Federal Crowdfunding Offering form, or copies of all documents filed with the Securities and Exchange Commission;2.
A consent to service of process on Form U-2 if not filing on Form U-CF; and3.
A filing fee of $300;(b)
For an issuer that has its principal place of business in this state, the filings required under paragraph (a) of this subsection shall be filed with the commissioner when the issuer makes its initial Form C filing concerning the offering with the Securities and Exchange Commission; and(c)
For an issuer that does not have its principal place of business in this state, but where residents of this state have purchased fifty (50) percent or greater of the aggregate amount of the offering, the filing required under paragraph (a) of this subsection shall be filed when the issuer becomes aware that such purchases have met this threshold, and in no event later than thirty (30) days from the date of completion of the offering.(2)
The initial notice filing required under subsection (1) of this section is effective for twelve months from the date of the filing with the commissioner.(3)
For each additional twelve-month period in which the same offering is continued, an issuer conducting an offering under 17 C.F.R § 227 and Sections 4(a)(6) and 18(b)(4)(C) of the Securities Act of 1933 shall renew the initial notice filing required under subsection (1) of this section by filing the following on or before the expiration of the initial notice filing:(a)
A completed Form U-CF marked "renewal";(b)
A cover letter requesting renewal; and(c)
A renewal fee of $300.Section 8.
Incorporation by reference.(1)
The following material is incorporated by reference:(a)
"Form CF 1, Kentucky Intrastate Crowdfunding Exemption Issuer Notice Filing Form", September 2023;(b)
"Form CF 2, Final Report of Sales Form", September, 2023;(c)
"Form CF 3, Internet Web Site Operator Registration Form", September 2023;(d)
"Form CF 4, Internet Web Site Operator Surety Bond Form", September 2023; and(e)
"Form CF 5, Broker-Dealer Internet Web Site Operator Notice Filing Form", September 2023.(f)
"Form U-2, Uniform Consent to Service of Process, September 2023(g)
"Form U-CF, Uniform Notice of Federal Crowdfunding Offering", September 2023(2)
This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Department of Financial Institutions, 500 Mero St 2SW19, Frankfort, Kentucky 40601, Monday through Friday, 8 a.m. to 4:30 p.m. This material may also be obtained at kfi.ky.gov.JUSTIN BURSE, Acting Commissioner
RAY PERRY, Secretary
APPROVED BY AGENCY: September 14, 2023
FILED WITH LRC: September 15, 2023 at 11:00 a.m.
PUBLIC HEARING AND COMMENT PERIOD: A public hearing on this administrative regulation shall be held on November 21, 2023, at 9:00 a.m., at 500 Mero Street, Frankfort Kentucky 40601. Individuals interested in being heard at this hearing shall notify this agency in writing by five workdays prior to the hearing, of their intent to attend. If no notification of intent to attend the hearing was received by that date, the hearing may be cancelled. A transcript of the public hearing will not be made unless a written request for a transcript is made. If you do not wish to be heard at the public hearing, you may submit written comments to the Department on the proposed administrative regulation. Written comments shall be accepted through November 30, 2023. Send written notification of intent to be heard at the public hearing or written comments on the proposed administrative regulation to the contact persons.
CONTACT PERSON: Gary Stephens Asst. General Counsel, 500 Mero Street, 2 SW 19, Frankfort, Kentucky 40601, phone 502-782-9046, fax 502-573-8787, email Gary.Stephens@ky.gov.
REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT
Contact Person:
Gary Stephens
(1) Provide a brief summary of:
(a) What this administrative regulation does:
This regulation provides for required forms, fees, filing procedures, and recordkeeping requirements for persons operating pursuant to KRS 292.411 and KRS 292.412, the Kentucky Intrastate Crowdfunding Exemption; and Notice filing requirements for federal crowdfunding offerings.
(b) The necessity of this administrative regulation:
This administrative regulation is needed to establish the required forms, fees, filing procedures, and recordkeeping requirements for persons operating pursuant to KRS 292.411 and KRS 292.412, the Kentucky Intrastate Crowdfunding Exemption.
(c) How this administrative regulation conforms to the content of the authorizing statutes:
KRS 292.500(3) authorizes the commissioner of the Department of Financial Institutions to promulgate administrative regulations necessary to carry out the provisions of KRS Chapter 292. KRS 292.411(1)(f) and (s) require the commissioner to prescribe the notice filing form to be used, the filing fee to be paid, and the records to be kept by an issuer. KRS 292.412(2) requires the commissioner to prescribe the filing procedure and form to be used by registered broker-dealers operating an Internet Web site pursuant KRS 292.411(1)(r). KRS 292.412(3), (5), (6), (7), and (8) require the commissioner to prescribe filing procedures and forms for applications and renewal applications, the filing fees to be paid, the records to be kept, and the examination fees for Internet Web site operators.
(d) How this administrative regulation currently assists or will assist in the effective administration of the statutes:
This administrative regulation establishes the required forms, fees, filing procedures, and recordkeeping requirements for persons operating pursuant to KRS 292.411 and KRS 292.412, the Kentucky Intrastate Crowdfunding Exemption.
(2) If this is an amendment to an existing administrative regulation, provide a brief summary of:
(a) How the amendment will change this existing administrative regulation:
N/A
(b) The necessity of the amendment to this administrative regulation:
N/A
(c) How the amendment conforms to the content of the authorizing statutes:
N/A
(d) How the amendment will assist in the effective administration of the statutes:
N/A
(3) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation:
All business entities engaged in crowdfunding activities that require registration, or a qualified exemption from registration, under KRS Chapter 292. The number of entities engaged in this activity is undetermined at this time but is anticipated to be minimal.
(4) Provide an analysis of how the entities identified in question (3) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including:
(a) List the actions that each of the regulated entities identified in question (3) will have to take to comply with this administrative regulation or amendment:
The entity engaged in a crowdfunding offering will need to file the required applicable notice form with the Department along with a filing fee, as referenced in the statute and set by this regulation, of $300. The entity will need to notice file with the department every twelve months for renewal of the exemption of the active crowdfunding registration.
(b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (3):
The entities will be required to file an annual notice filing fee of $300.
(c) As a result of compliance, what benefits will accrue to the entities identified in question (3):
The entities will be exempt for registration with the department upon qualified notice filing with the department.
(5) Provide an estimate of how much it will cost the administrative body to implement this administrative regulation:
(a) Initially:
Costs to implement this regulation amendment will be incorporated into the current budget and will be minimal.
(b) On a continuing basis:
Costs for subsequent years will be incorporated into the department’s budget and will be minimal.
(6) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation:
Current department resources.
(7) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change if it is an amendment:
The department does not anticipate a need to increase fees or funding to implement this regulation.
(8) State whether or not this administrative regulation establishes any fees or directly or indirectly increases any fees:
There is a $300 filing fee for notice filing the exemption with the department. The controlling statute indicates a fee would be assessed and determined by the commissioner.
(9) TIERING: Is tiering applied?
Tiering was not applied. The regulation did not require tiering to be applied to implement.
FISCAL NOTE
(1) What units, parts, or divisions of state or local government (including cities, counties, fire departments, or school districts) will be impacted by this administrative regulation?
The Department of Financial Institutions
(2) Identify each state or federal statute or federal regulation that requires or authorizes the action taken by the administrative regulation.
KRS 292.500(3), 292.410, 292.411(1), and 292.412
(3) Estimate the effect of this administrative regulation on the expenditures and revenues of a state or local government agency (including cities, counties, fire departments, or school districts) for the first full year the administrative regulation is to be in effect.
The amended regulation should have no financial impact on state or local government agencies.
(a) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for the first year?
The effect on overall revenue for the Department will be minimal and will not have a substantial impact on the Department’s budget.
(b) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for subsequent years?
The amount of revenue generated in subsequent years is expected to be minimal to the Department.
(c) How much will it cost to administer this program for the first year?
The Department does not anticipate additional cost to implement this regulatory amendment.
(d) How much will it cost to administer this program for subsequent years?
The Department does not anticipate additional costs to implement this regulatory change in subsequent years.
Note: If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation.
Revenues (+/-):
Expenditures (+/-):
Other Explanation:
There will be minimal fiscal impact on the Department in terms of implementation or revenue based on the relatively small amount of the fee.
(4) Estimate the effect of this administrative regulation on the expenditures and cost savings of regulated entities for the first full year the administrative regulation is to be in effect.
(a) How much cost savings will this administrative regulation generate for the regulated entities for the first year?
Cost savings for the industry and the department will be achieved by timely filing of the notice. Therefore, costs savings to the entities will be determined by internal controls of the regulated entity.
(b) How much cost savings will this administrative regulation generate for the regulated entities for subsequent years?
Cost savings will be achieved by timely filing of the notice. Therefore, costs savings to the entities in subsequent years will be determined by internal controls of the regulated entity.
(c) How much will it cost the regulated entities for the first year?
The cost to the entity claiming the exemption will be dependent upon the timely filing of the notice forms and submission of the $300 filing fee.
(d) How much will it cost the regulated entities for subsequent years?
There will be a $300 fee for renewals of the exemption notice.
Note: If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation.
Cost Savings (+/-):
Expenditures (+/-):
Other Explanation:
The costs incurred to the regulated entity are directly related to their internal controls and filing of the exemption notice and filing fee.
(5) Explain whether this administrative regulation will have a major economic impact, as defined below.
"Major economic impact" means an overall negative or adverse economic impact from an administrative regulation of five hundred thousand dollars ($500,000) or more on state or local government or regulated entities, in aggregate, as determined by the promulgating administrative bodies. [KRS 13A.010(13)] The new regulation will not have a major economic impact on the regulated entities or the Department.