6 Del. Admin. Code § 200-E-506

Current through Register Vol. 28, No. 5, November 1, 2024

Section 200-E-506 - Claim of Exemption by Persons Organized and Operated Not for Private Profit but Exclusively for Religious Purposes

Any security issued by a person organized and operated not for private profit but exclusively for religious, educational, benevolent or charitable purposes shall be exempt from the securities registration requirement of the Act provided as follows:

(a) The issuer is (1) a religious organization affiliated with, associated with, or authorized by a religious denomination or denominations; or (2) a religious organization that consists of or acts on behalf of individual or local churches or local or regional church organizations.

(b) The issuer is an organization that qualifies and operates under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended;

(c) The issuer, alone or through its predecessor organization:

(1) has been in existence for over ten years;

(2) has received audited financial statements with an unqualified opinion from a certified public accountant for its most recent three fiscal years; and

(3) has experienced no defaults on any outstanding obligations to investors for the period that it has issued securities.

(d) The issuer's:

(1) cash, cash equivalents and readily marketable assets have had a market value of at least five percent of the principal balance of its total outstanding debt securities for the last three fiscal years or 36 months prior to the issue; or

(2) net worth, as that term is used in Generally Accepted Accounting Principles, has been at least equal to three percent of its total assets for the last three fiscal years or 36 months prior to the issue.

(e) Prior to any sale of the securities, the issuer provides an investor with a disclosure document reflecting financial and other information concerning the issuer and relevant risks involved in the investment.

(f) The issuer makes loans to or otherwise utilizes the net proceeds of the offering in support of:

(1) local churches, or other religious organizations affiliated or associated with such churches; or

(2) related religious organizations.

(g) The issuer:

(1) has a net worth, as that term is used in Generally Accepted Accounting Principles, of $5,000,000.00 or more which includes all church owned property; or

(2) makes loans, secured by either real property or by a pledge of readily marketable securities, at all times, having equal or greater value than the loan amount, to finance the purchase, construction or improvement of church related property, buildings, related capital expenditures, or to refinance existing debt to be secured by such property, or for other operating expenses of the entities described in (f) above, provided the obligation is secured by such property.

6 Del. Admin. Code § 200-E-506

18 DE Reg. 394 (11/1/2014) (Final)