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Private Placement Terms and Codes

Private Placement Exemption Rules

The exemption rules listed below are supported by the Folio REST service. Other exemptions may be added over time as permitted by law.

Name Code Description
Rule 504(b)(i) D Maximum offer size is $1,000,000.00.
Only accredited (individuals and QIBs) allowed.
Rule 504(b)(ii) E Maximum offer size is $1,000,000.00.
Only accredited (individuals and QIBs) allowed.
Rule 504(b)(iii) F Maximum offer size is $1,000,000.00.
Only accredited (individuals and QIBs) allowed.
Rule 505 G Maximum offer size of $5,000,000.00.
Both accredited and non-accredited allowed—the issuer may only accept up to 35 non-accredited individuals.
Rule 506(b) H No maximum offer size.
Both accredited and non-accredited allowed—the issuer may only accept up to 35 non-accredited individuals.
Rule 506(c) K No maximum offer size.
Both accredited and non-accredited allowed—the issuer may only accept up to 35 non-accredited individuals.
Securities Act Section 4(5) I Maximum offer size of $5,000,000.00.
Only accredited (individuals and QIBs) allowed.
Section 3(c)(1-14) J No maximum offer size.
Only accredited (individuals and QIBs) allowed.
Regulation A Tier 2 A Maximum offer size of $50,000,000.00.
Both accredited and non-accredited allowed.
Rule 1001 B Issuer must be located in California.
Maximum offer size of $5,000,000.00.
Must be “Qualified Investors”—not the same definition as Accredited, but we will default to Accredited option.
Not more than 35 investors (up to the issuer to ensure they do not accept more than the allowable amount).
Rule 147 C The Issuer can only make the offer available in their state of registration (e.g. An Oregon company can only offer to Oregon residents).
No maximum offer size.
Both accredited and non-accredited allowed.
OTHER O Others

Private Placement Offer Status

Name Code Description
INITIAL I After an offer is created, the offer has the INITIAL status. Whether the offer is published or not does impact the offer status.
IN_PROGRESS P After an offer is first executed, meaning that the issuer has chosen to issue the offered units to approved subscribers, the offer status changes to IN_PROGRESS. Subscriptions may still be submitted while IN_PROGRESS.
CLOSED_COMPLETE 1 After an issuer closes an offer or after an offer expires, if there are no pending or accepted subscriptions, the offer state changes to CLOSED_COMPLETE. In this state, the investors cannot subscribe to the offer anymore. This indicates the offer has been completed successfully by the expiration date.
CLOSED_INCOMPLETE 2 When an issuer closes an offer with pending subscriptions, the offer state changes to CLOSED_INCOMPLETE. In this state, new investors cannot subscribe to the offer anymore, but the issuer still retains the ability to approve pending subscriptions and execute the offer, issuing units to those accepted subscriptions.
CLOSED_CANCELLED 3 When an issuer cancels an offer, the pending subscriptions—and any associated folio orders—are cancelled and the offer state changes to CLOSED_CANCELLED. In this state, new investors cannot subscribe to the offer anymore, but the issuer can execute the offer.

Private Placement Subscription Status

Name Code Description
INITIAL I When an investor subscribes to an offer, if cash is not required at the time of offer subscription, the order state becomes INITIAL.
ORDER_CREATED O After an investor subscribed to an offer, if cash is available on the cash required date, the subscription state changes to ORDER_CREATED.
ACCEPTED A When an issuer accepts pending subscriptions, the subscriptions in pending status change to ACCEPTED.
PROCESSING W When an issuer successfully executes an offer, the status of an accepted subscription changes to PROCESSING.
COMPLETE F After an issuer executed an offer, and once the issuances of units to purchasers and payment of funds to the issuer has been finalized, the status of the processed subscriptions change to COMPLETE.
REJECTED R When an issuer or investment professional rejects an order, the subscription state changes to REJECTED.
CANCELLED C When an investor cancels a subscription, or when the account the subscription has been submitted for does not have enough cash on the cash required date, the subscription state changes to CANCELLED. If the subscription had reached ORDER_CREATED status, any associated folio order would be cancelled following the subscription cancellation.

Offer Execution Type Code

Execution type defines whether there is a contingency on the offer that must be met before it can be executed.

Name Code Description
ALL_OR_NONE A An offer can be executed only when the aggregate approved subscriptions amount reaches the maximum offer size.
PART_OR_NONE P An offer can be executed only when the approved subscription amount reaches or exceeds the stated minimum threshold. This threshold is always less than the maximum offer size, and greater than $1.
BEST_EFFORTS B This indicates there is no contingency to be met, and that the offer can be executed for any amount up to and including the maximum offer size.

Industry Sector Codes

These options correspond to the options available on the SEC Form D.

An industry group represents the industry of an issuing firm. Some of the industry sectors have subsectors up to two tiers. Such subsectors are represented as having a parent industry sector in the table below.

Name Code Parent Industry Sector Description
AGRICULTURE AGR Agriculture
BANKING_AND_FINANCIAL_SERVICES BAN Banking & Financial Services
COMMERCIAL_BANKING COB BANKING_AND_FINANCIAL_SERVICES Commercial Banking
INSURANCE INS BANKING_AND_FINANCIAL_SERVICES Insurance
INVESTING INV BANKING_AND_FINANCIAL_SERVICES Investing
INVESTMENT_BANKING INB BANKING_AND_FINANCIAL_SERVICES Investment Banking
POOLED_INVESTMENT_FUND PIF BANKING_AND_FINANCIAL_SERVICES Pooled Investment Fund
HEDGE_FUND HFU POOLED_INVESTMENT_FUND Hedge Fund
PRIVATE_EQUITY PEQ POOLED_INVESTMENT_FUND Private Equity
VENTURE_CAPITAL_FUND VCF POOLED_INVESTMENT_FUND Venture Capital Fund
OTHER_INVESTMENT_FUND OTF BANKING_AND_FINANCIAL_SERVICES Other Investment Fund
OTHER_BANKING_AND_FINANCIAL_SERVICES OTB Other Banking & Financial Services
BUSINESS_SERVICES BUS Business Services
ENERGY ENE Energy
ELECTRIC_UTILITIES ELE ENERGY Electric Utilities
ENERGY_CONSERVATION CON ENERGY Energy Conservation
COAL_MINING COA ENERGY Coal Mining
ENVIRONMENTAL_SERVICES ENV ENERGY Environmental Services
OIL_AND_GAS OGS ENERGY Oil & Gas
OTHER_ENERGY OTE ENERGY Other Energy
HEALTH_CARE HCA Health Care
BIOTECHNOLOGY BIO HEALTH_CARE Biotechnology
HEALTH_INSURANCE HIS HEALTH_CARE Health Insurance
HOSPITALS_AND_PHYSICIANS HOS HEALTH_CARE Hospitals & Physicians
PHARMACEUTICALS PHA HEALTH_CARE Pharmaceuticals
OTHER_HEALTH_CARE OTC HEALTH_CARE Other Health Care
MANUFACTURING MAN Manufacturing
REAL_ESTATE RES Real Estate
COMMERCIAL COR REAL_ESTATE Commercial
CONSTRUCTION CST REAL_ESTATE Construction
REITS_AND_FINANCE FIN REAL_ESTATE REITS & Finance
RESIDENTIAL RDN REAL_ESTATE Residential
OTHER_REAL_ESTATE OTS REAL_ESTATE Other Real Estate
RETAILING RET Retailing
RESTAURANTS RTA Restaurants
TECHNOLOGY TEC Technology
COMPUTERS CPT TECHNOLOGY Computers
TELECOMMUNICATIONS TEL TECHNOLOGY Communications
OTHER_TECHNOLOGY OTT TECHNOLOGY Other Technology
TRAVEL TRA Travel
AIRLINES_AND_AIRPORTS AAL TRAVEL Airlines & Airports
LODGING_AND_CONVENTIONS LDG TRAVEL Lodging & Conventions
TOURISM_AND_TRAVEL_SERVICES TOU TRAVEL Tourism & Travel Services
OTHER_TRAVEL OTL TRAVEL Other Travel
OTHER OTH Other

Issuer Size Code

These options correspond to the options available on the SEC Form D.

Name Code Description
REVENUE_NONE A The issuer has no revenue.
REVENUE_1_1M B Revenue range is equal to or less than $1,000,000.
REVENUE_1M_5M C Revenue range is greater than $1,000,000 and less than or equal to $5,000,000.
REVENUE_5M_25M D Revenue range is greater than $5,000,000 and less than or equal to $25,000,000.
REVENUE_25M_100M E Revenue range is greater than $25,000,000 and less than or equal to $100,000,000.
REVENUE_OVER_100M F Revenue range is greater than $100,000,000.
REVENUE_DECLINE_TO_DISCLOSE G Revenue range is not disclosed.
REVENUE_NA H Revenue range is not available.
VALUE_NONE 1 Aggregate net asset value is $0.
VALUE_1_5M 2 Aggregate net asset value range is less than $5,000,000.
VALUE_5M_25M 3 Aggregate net asset value range is greater than $5,000,000 and less than or equal to $25,000,000.
VALUE_25M_50M 4 Aggregate net asset value range is greater than $25,000,000 and less than or equal to $50,000,000.
VALUE_50M_100M 5 Aggregate net asset value range is greater than $50,000,000 and less than or equal to $100,000,000.
VALUE_OVER_100M 6 Aggregate net asset value range is greater than $100,000,000.
VALUE_DECLINE_TO_DISCLOSE 7 Aggregate net asset value range is not disclosed.
VALUE_NA 8 Aggregate net asset value range is not available.

Annual Income Range Code

Name Code Description
ZERO_25K 1 Annual income range is equal to or less than $25,000.
K25_50K 2 Annual income range is greater than $25,000 and less than or equal to $50,000.
K50_100K 3 Annual income range is greater than $50,000 and less than or equal to $100,000.
K100_200K 4 Annual income range is greater than $100,000 and less than or equal to $200,000.
K200_300K 5 Annual income range is greater than $200,000 and less than or equal to $300,000.
K300_500K 6 Annual income range is greater than $300,000 and less than or equal to $500,000.
OVER_500K 7 Annual income range is greater than $500,000.

Liquid Net Worth Range Code

Liquid Net Worth Range Code Description
ZERO_25K 1 Liquid net worth range is equal to or less than $25,000.
K25_50K 2 Liquid net worth range is greater than $25,000 and less than or equal to $50,000.
K50_200K 3 Liquid net worth range is greater than $50,000 and less than or equal to $200,000.
K200_500K 4 Liquid net worth range is greater than $200,000 and less than or equal to $500,000.
K500_1M 5 Liquid net worth range is greater than $500,000 and less than or equal to $1,000,000.
M1_2M 6 Liquid net worth range is greater than $1,000,000 and less than or equal to $2,000,000.
M2_3M 7 Liquid net worth range is greater than $2,000,000 and less than or equal to $3,000,000.
OVER_3M 8 Liquid net worth range is greater than $3,000,000.

Net Worth Range Code

Net Worth Range Code Description
ZERO_25K 1 Net worth range is equal to or less than $25,000.
K25_50K 2 Net worth range is greater than $25,000 and less than or equal to $50,000.
K50_200K 3 Net worth range is greater than $50,000 and less than or equal to $200,000.
K200_500K 4 Net worth range is greater than $200,000 and less than or equal to $500,000.
K500_1M 5 Net worth range is greater than $500,000 and less than or equal to $1,000,000.
M1_2M 6 Net worth range is greater than $1,000,000 and less than or equal to $2,000,000.
M2_3M 7 Net worth range is greater than $2,000,000 and less than or equal to $3,000,000.
OVER_3M 8 Net worth range is greater than $3,000,000

Participating Firm Status Code

Status Code Description
PENDING P The offer has been made available to a participating firm, and the offer can be accessed by that firm and its clients.
ACCEPTED A The status is A for the creating firm. This field is not currently used for participating firms.
REJECTED R The participating firm has declined participation in the offer.
DELETED D The participating firm has been deleted from participation in the offer by the creating firm.

Previous Experience Setting Codes

Previous Experience Code Description
NONE_REQUIRED N No previous experience with private placements is required.
ANY_EXPERIENCE A Previous private placement experience is required, regardless of industry sectors.
INDUSTRY_EXPERIENCE I Previous private placement experience is required, and that experience must be within the issuer's industry sector as specified in the industry field.

Natural Person Accreditation Setting Code

Individual investors have to satisfy one of the following accreditation criteria to be eligible to access offers made under certain Private Placement Exemption Rules. This setting is based upon the issuer's requirement, and cannot be in conflict with the exemption's allowance. Each participating firm inherits the settings on the offer, as established by the offer creator.

Name Code Description
Any investor permissible under the selected offering exemption rule A Investors permitted by the offering exemption rule selected can invest in the offer, generally including some number of non-accredited investors.
Accredited or Qualified Client Only C Only investors who are Accredited Investors or Qualified Clients can invest in the offer.
Qualified Client Only Q Only investors who are accredited by income or net worth and have net worth greater than $2,000,000 can submit a request to purchase the offer.

Corporate Accreditation Setting Code

Corporate Accreditation Type Code Description
Any investor permissible under the selected offering exemption rule. A Entities permitted by the offering exemption rule selected can invest in the offer, generally including some number of non-accredited entity investors.
Accredited or QIB Only C The offer allows only entities that are Accredited or Qualified Institutional Buyers (QIBs) to participate.
QIB Only Q The offer allows only entities that are QIBs to participate.

Security Type Code

These options correspond to the options available on the SEC Form D.

Security Type Code Description
EQUITY E Common Stock, Preferred Stock, etc.
DEBT D
WARRENT_OPTION_RIGHT 3
SECURITY_FROM_WARRENT_OPTION_RIGHT S
POOLED_INVESTMENT_FUND_INTEREST I
TENANT_IN_COMMON_SECURITY T
MINERAL_PROPERTY_SECURITY M
OTHER O

Delivery Method Code

Name Code Description
Shares/Units Issued through DTC Broker-to-Broker Trade (aka DVP/RVP) DVPRVP The Issuer will instruct its DTC agent or dealer manager to place trades with Folio on the trade date. The trades will use a one business day settlement and will settle on the settlement date. /Folio Investments, Inc. / DTC Number: 0728 / MPID: FTBR
Shares/Units Issued through DTC DWAC DWAC The Issuer will instruct the transfer agent to accept Folio’s DWAC/transfer request on the settlement date. The shares/units will be delivered to Folio on the settlement date. The offering proceeds will be available to the Issuer in the Issuer’s Folio account after Folio has confirmed delivery of the shares/units. The DWAC delivery date will coincide with the trade settlement date. /Folio Investments, Inc. / DTC Number: 0728 / MPID: FTBR
Shares/Units Held by Issuer ISSUER As of the settlement date, the Issuer shall record in its holders’ records the aggregate position of shares/units offered in the Offering as being in street name, “Folio Investments, Inc. for the exclusive benefit of customers”. The Issuer has provided Folio a signed Securities Authorization Letter. If the Issuer is required to hold securities in clients’ names, the Issuer shall properly record in its holders’ records a position for each client.
Shares/Units Held by a Transfer Agent TA As of the settlement date, the Issuer will instruct its Transfer Agent to record, on behalf of Issuer, the aggregate position of shares/units offered in the Offering as being in street name, “Folio Investments, Inc. for the exclusive benefit of customers”. The offering proceeds will be available to the Issuer in the Issuer’s Folio account after Transfer Agent provides satisfactory evidence to Folio that the aggregate position has been properly recorded on the books and records of Transfer Agent on behalf of Issuer. The Issuer has provided Folio a signed Securities Authorization Letter. If the Issuer is required to hold securities in clients’ names, the Transfer Agent shall properly record in its holders’ records a position for each client. The Transfer Agent will provide monthly statements to Folio for reconciliation.
Units Held by Administrator ADMIN As of the Settlement Date, the Issuer will instruct its Administrator to record, on behalf of Issuer, the position for each investor. The offering proceeds will be available to the Issuer in the Issuer’s Folio account after Administrator provides satisfactory evidence to Folio that each investor position has been properly recorded on the books and records of Administrator on behalf of Issuer. The Issuer has provided Folio a signed Securities Authorization Letter. The Administrator will provide monthly statements to Folio for reconciliation.
Other OTHER  

Private Placement Offer Error Code

Code Description
pp.industryGroup.invalid.choice
pp.issuerSize.invalid.choice
pp.securityType.invalid.choice
pp.exemptionType.invalid.choice
pp.offerState.invalid.choice
pp.executionType.invalid.choice
pp.participatingFirm.status.invalid.choice
pp.naturalPersonaAccreditationType.invalid.choice
pp.corporateAccreditationType.invalid.choice
pp.previousExperienceType.invalid.choice
pp.minAnnualIncomeRange.invalid.choice
pp.minLiquidNetworthRange.invalid.choice
pp.minNetworthRange.invalid.choice
pp.offerStatus.invalid.choice
pp.creatingMember.not.found
pp.creatingFirmRep.not.found
pp.creatingMember.not.belong.to.creatingFirm
pp.creatinFirmRep.not.belong.to.creatingFirm
pp.issuingFirmRep.not.found
pp.issuingFirmRep.not.belong.to.creatingFirm
pp.issuingFirm.not.found
pp.issuingFirm.not.belong.to.creatingFirm
pp.member.not.belong.to.participating.firm
pp.offerName.invalid.length
pp.offerName.invalid.char
pp.offerName.not.available
pp.ticker.cannot.be.null
pp.ticker.invalid.prefix
pp.ticker.invalid.character
pp.ticker.invalid.length
pp.ticker.not.available
pp.ticker.unknown.error
pp.issuerSize.must.be.based.on.aggregate.net.asset.value
pp.issuerSize.must.be.based.on.revenue
pp.industryGroup.must.be.the.lowest.tier
pp.executionType.allOrNone.has.no.offer.size
pp.executionType.allOrNone.has.minThresholdAmt
pp.executionType.partOrNone.has.no.minThresholdAmt
pp.executionType.bestEffort.has.minThresholdAmt
pp.closingPrice.less.than.minimum
pp.offerSize.less.than.minimum
pp.minInvestmentAmt.less.than.minimum
pp.maxInvestmentAmt.less.than.minimum
pp.executionThresholdAmt.less.than.minimum
pp.minInvestmentAmt.greater.than.offerSize
pp.maxInvestmentAmt.greater.than.offerSize
pp.executionThresholdAmt.greater.than.offerSize
pp.minInvestmentAmt.greater.than.maxInvestmentAmt
pp.closingDate.must.be.future.date
pp.cashLockDate.cannot.be.past.date
pp.cashLockDate.cannot.be.after.closing.date
pp.closingDate.cannot.change.after.offer.expiration
pp.cashLockDays.cannot.be.increased
pp.participatingFirm.not.found
pp.participatingFirm.not.accessible.to.private.placement
pp.participatingFirm.not.participating.in.offer
pp.participatingFirm.invalid.status
pp.cannot.remove.creating.firm.from.participatingFirm
pp.offerStatus.invalid.status
pp.approvedAmount.cannot.exceed.offer.size
pp.approvedAmount.requirement.for.execution.type.not.met
privateplacement.offer.invalidmaxoffersize
privateplacement.offer.invalidaccreditationallowed
privateplacement.offer.invalidstatesolicitation
privateplacement.offer.invalidmandatoryholdingperiod
privateplacement.offer.maximumnonaccreditedexceededlimit

Private Placement Order Error Code

Terms
Code Description
pp.buy.only.rule Rule to see if the subscription is a buy. Only buys are allowed for private placements.
pp.cash.requirement.rule Rule to see if enough cash is available when cash is required at the time of the subscription.
pp.experience.required.rule Rule to see if the member meets the Previous Investing Experience requirements setup for the offer.
pp.folionumber.rule Rule to see if the folionumber, if specified, is for the correct account and is for the 02 folio.
pp.ira.approval.rule Rule to Ensure offer is IRA approved or the account selected for the subscription is not an IRA.
pp.min.max.threshold.rule Rule to see if the requested subscription amount meets the min and max settings for the offer.
pp.offer.access.rule Rule to see if subscriptions are placed by the member who has access to the offer.
pp.open.offer.rule Rule to see if an offer is in a subscription accepting state.
pp.verified.accreditation.rule Rule to see if the exemption rule requires accreditation verification, and if the member meets that standard.
pp.wealth.minimums.rule Rule to see if the member meets the required net worth ranges setup for the offer.
pp.order.exists.rule Rule to see if the specified subscription exists.
pp.accreditation.requirement.rule Rule to see if natural person and corporate entity users satisfy the accreditation requirements for the offer.
pp.non.accredited.client.limit.rule Rule to see if the number of non-accredited subscriber is above the limit allowed for the offer type.
pp.total.approved.amount.exceeds.offer.size Rule to check that the total of accepted subscription amounts does not exceed the maximum offer size specified in the offer configuration.
pp.approved.amount.exceeds.requested.amount Rule to see if the subscription amount for a user that has been edited by the issuer exceeds the amount requested by the user.
pp.offer.not.available Rule to see if offer is available for subscription.
pp.no.required.docs.exist Rule to check that there is at least one offering document loaded and marked as Required.
pp.not.all.required.docs.viewed Feature not currently in use (If applied, all documents marked as Required must be viewed by the user before a subscription is entered.)
pp.content.server.not.available Rule to see if the document management system is available at the moment.
pp.order.agreement.not.exist Feature not currently in use (If applied, an Order Agreement document must be available in the document management system before subscription.)
pp.order.agreement.not.viewed Feature not currently in use (If applied, an Order Agreement document must be viewed by every client before subscription.)
pp.invalid.order.status Rule to ensure that 1) the subscription status can only be updated to ’ACCEPTED‘ when the order is in ’INITIAL‘, ’REJECTED‘ or ’ORDER_CREATED‘ status, or 2) it can only be updated to ’REJECTED‘ or ’CANCELLED‘ status, when the order is in ’INITIAL‘, ’ACCEPTED‘ or ’ORDER_CREATED‘ status, or 3) it is not any valid status listed.
pp.invalid.approval.amount Rule to ensure that no issuer edited subscription amount is passed when the subscription status is ’REJECTED‘ or ’CANCELLED‘.
pp.invalid.account.access.permission Rule to ensure that currently logged-in user has TRADER or greater permission level on the account selected for the subscription.
pp.invalid.order.status.change.permission Rule to ensure that the user attempting to accept or reject subscribers belongs to the issuer firm that created the offering (firms participating in the offering distribution process can not accept or reject subscriptions).
pp.reasonForTrade.invalid.choice Rule to ensure that ’reasonForTrade‘ is valid.
pp.side.invalid.choice Rule to ensure that the side field is ’1‘ (’Buy‘).

Terms

  • Pending subscription: A conditional order in the INITIAL or ORDER_CREATED status.

Change Log

10/11/2018

  1. Added Delivery Method Code

09/21/2018

  1. Added Delivery Method Code table

04/29/2016

  1. Added Change Log
  2. Updated Private Placement Exemption Rules table

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