​​​​​​​Statute: Wis. Stat. s. 551.202(25)

Administrative Code: Wis. Admin. Code s. DFI-Sec 7.01(4)(b)

Used for: Offers and sales of preorganization subscriptions

Note: The subscription must not be binding, and no payment may be made by any subscriber until the securities subscribed for may legally be sold. Also, no commission or other remuneration may be paid for soliciting subscribers; and no advertising may be published, broadcast, or circulated unless allowed by the Division of Securities. However, if advertising is distributed to 10 or fewer persons in Wisconsin, it is not defined as being "circulated."

Filing requirement: Self-executing, if no advertising is published or circulated. No filing or Consent to Service of Process is necessary to claim this exemption. If advertising is "published" or "circulated," as defined in Wis. Admin. Code s. DFI-Sec 1.02(1)(a) and (b) in connection with the transaction or the securities underlying the transaction for which this exemption is being claimed, it must be filed with the division and may not be used unless and until the division has allowed its use. If advertising is filed, a fee of $10 per item, as set forth at Wis. Admin. Code s. DFI-Sec 7.01(4)(b) must accompany the filing.

Related Considerations: Any business that has already been formed is ineligible to use this exemption. However, the Solicitations of Interest​ exemption may be considered for such businesses, and may be used by businesses in the preorganization stage as well.

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History: Predecessor statute Wis. Stat. s. 551.23(9) adopted on January 1, 1970.  It substantially differed from the parallel section of the Uniform Securities Act of 1956, s. 402(b)(10). The Uniform Act of 1956 does not contain an advertising prohibition, which was added to the predecessor Wisconsin Act by amendment effective October 1, 1971. Nor does the Uniform Act section require that the subscription be non­binding. The Uniform Act exempts preorganization "certificates or subscriptions," while the Wisconsin Securities law expressly exempts subscriptions only. Renumbered effective January 1, 2009.