State Registration Methods: Coordination, Qualification & Notice
Examines the three methods of state securities registration: Registration by Coordination (concurrent SEC offerings), Qualification (intrastate), and Notice Filing.
- Coordination: Used for offerings registered under the 1933 Act; on file 10-20 days; becomes effective SIMULTANEOUSLY with federal SEC registration.
- Qualification: Used for intrastate non-SEC offerings (Rule 147); becomes effective ONLY when the Administrator so orders.
- Notice Filing: Used for Federal Covered Securities (mutual funds, Reg D 506); states receive copies of SEC filings and fees.
Unless a security is exempt or involved in an exempt transaction, it must be registered with the state prior to sale. The Uniform Securities Act provides three methods of registration:
1. Registration by Coordination (Section 303): Used when an offering is simultaneously registered with the SEC under the Securities Act of 1933. The state registration statement must be on file for at least 10 to 20 days. It becomes effective concurrently with the federal SEC registration, provided pricing information has been on file for 2 business days and no stop order is pending.
2. Registration by Qualification (Section 304): Used for securities offered exclusively within one state under federal Rule 147 or offerings not registered with the SEC. It requires exhaustive disclosures regarding corporate operations and financials. Critically, it becomes effective ONLY when the state Administrator issues an order.
3. Notice Filing (Section 307A): Established by NSMIA for Federal Covered Securities (such as investment company shares). The state cannot review the merits of the offering, but may require copies of SEC documents (Form NF), a consent to service of process, and state filing fees.
- Qualification does NOT become effective at noon on the 30th day; it becomes effective ONLY upon Administrator affirmative order.
- Coordination requires proposed price ranges on file for at least 2 full business days prior to effectiveness.
A microbrewery operating exclusively in Wisconsin plans to raise $2 million in equity capital by offering common shares solely to residents of Wisconsin under SEC Rule 147 (the federal intrastate offering exemption). Because the offering is not registered with the SEC, the company must register the shares with the Wisconsin Securities Division using Registration by Qualification. When does Registration by Qualification become effective under state law?