Exemptions

1. Securities Reporting Issuer

• These are public companies required to file reports with the Securities and Exchange Commission (SEC).
• An entity qualifies for this exemption if EITHER of the following two criteria apply:
  • The entity is an issuer of a class of securities registered under section 12 of the Securities Exchange Act of 1934.
  • The entity is required to file supplementary and periodic information under section 15(d) of the Securities Exchange Act of 1934.

2. Governmental Authority​

• This is a federal, state, or local government agency, or a wholly owned instrumentality thereof.
• An entity qualifies for this exemption if BOTH of the following criteria apply:
  • The entity is established under the laws of the United States, an Indian tribe, a State, or a political subdivision of a State, or under an interstate compact between two or more States.
  • The entity exercises governmental authority on behalf of the United States or any such Indian tribe, State, or political subdivision.

3. Bank

• Banks are financial institutions chartered under federal or state law that accepts deposits and makes loans.
• An entity qualifies for this exemption if ANY of the following three criteria apply:
  • The entity is a bank as defined in section 3 of the Federal Deposit Insurance Act.
  • The entity is a bank as defined in section 2(a) of the Investment Company Act of 1940.
  • The entity is a bank as defined in section 202(a) of the Investment Advisers Act of 1940.

4. Credit Union

• Credit unions are member-owned financial cooperatives that operate for the benefit of their members.
• An entity qualifies for this exemption if EITHER of the following two criteria apply:
  • The entity is a Federal Credit Union as defined in section 101 of the Federal Credit Union Act.
  • The entity is a State Credit Union as defined in section 101 of the Federal Credit Union Act.

5. Depository Institution Holding Company

• This is a company that controls one or more banks or savings associations.
• An entity qualifies for this exemption if EITHER of the following two criteria apply:
  • The entity is a bank holding company as defined in section 2 of the Bank Holding Company Act of 1956.
  • The entity is a savings and loan holding company as defined in section 10(a) of the Home Owners’ Loan Act.

6. Money Services Business

• These businesses are engaged in transmitting money or providing currency exchange services.
• An entity qualifies for this exemption if EITHER of the following two criteria apply: •The entity is a money transmitting business registered with FinCEN under 31 U.S.C. 5330. •The entity is a money services business registered with FinCEN under 31 CFR 1022.380.

7. Broker or Dealer in Securities​

• This is a firm engaged in buying and selling of securities.
• An entity qualifies for this exemption if BOTH of the following criteria apply: •The entity is a broker or dealer, as those terms are defined in section 3 of the Securities Exchange Act of 1934. •The entity is registered under section 15 of the Securities Exchange Act of 1934.

8. Securities Exchange or Clearing Agency

• This refers to a facility for the trading and clearing of securities.
• An entity qualifies for this exemption if BOTH of the following criteria apply:
• The entity is an exchange or clearing agency, as those terms are defined in section 3 of the Securities Exchange Act of 1934.
• The entity is registered under sections 6 or 17A of the Securities Exchange Act of 1934.

9. Other Exchange Act Registered Entity​

• Entities registered under the Securities Exchange Act of 1934, excluding brokers, dealers, exchanges, and clearing agencies, fall under this category.
• An entity qualifies for this exemption if BOTH of the following criteria apply:
• The entity is not a securities reporting issuer as defined in Exemption 1, broker or dealer in securities as defined in Exemption 7, or securities exchange or clearing agency as defined in Exemption 8.
• The entity is registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934.

10. Investment Company or Investment Advisor​

• An entity that pools investor money to invest in securities falls under this category.
• An entity qualifies for this exemption if BOTH of the following criteria apply:
• The entity is an investment company or investment advisor defined as either:
  • An investment company in section 3 of the Investment Company Act of 1940; or
  • An investment adviser in section 202 of the Investment Advisers Act of 1940.
• The entity is registered with the Securities and Exchange Commission under either of these authorities:
  • The Investment Company Act of 1940; or
  • The Investment Advisers Act of 1940.

11. Venture Capital Fund Advisor​

• Quite simply, this refers to a firm that advises venture capital funds on investments.
• An entity qualifies for this exemption if BOTH of the following criteria apply:
• The entity is an investment adviser that is described in section 203(l) of the Investment Advisers Act of 1940.
• The entity has filed Item 10, Schedule A, and Schedule B of Part 1A of Form ADV, or any successor thereto, with the Securities and Exchange Commission.

12. Insurance Company​

• Basically, any company that provides insurance coverage is an insurance company.
• An entity qualifies for this exemption if the following criterion applies:
• The entity is an insurance company as defined in section 2 of the Investment Company Act of 1940.

13. State-Licensed Insurance Provider​

• This includes any individual or entity licensed to sell, solicit, or negotiate insurance contracts.
• An entity qualifies for this exemption if BOTH of the following criteria apply:
• The entity is an insurance producer that is authorized by a State and subject to supervision by the insurance commissioner or a similar official or agency of a State.
• The entity has an operating presence at a physical office within the United States.
  • The term operating presence at a physical office within the United States means that an entity regularly conducts its business at a physical location in the United States that the entity owns or leases and that is physically distinct from the place of business of any other unaffiliated entity.

14. Commodity Exchange Act Registered Entity​

• An entity engaged in commodity futures or options trading can qualify as a Commodity Exchange Act Registered Entity.
• An entity qualifies for this exemption if EITHER of the following two criteria apply:
  • The entity is a registered entity as defined in section 1a of the Commodity Exchange Act.
  • The entity is one of these entities registered with the Commodity Futures Trading Commission under the Commodity Exchange Act:
    • Futures commission merchant as defined in section 1a.
    • Introducing broker as defined in section 1a.
    • Swap dealer as defined in section 1a.
    • Major swap participant as defined in section 1a.
    • Commodity pool operator as defined in section 1a.
    • Commodity trading advisor as defined in section 1a.

15. Accounting Firm​

• A firm that provides accounting, auditing, and tax services can be understood as an accounting firm.
• An entity qualifies for this exemption if the following criterion applies:
  • The entity is a public accounting firm registered in accordance with section 102 of the Sarbanes-Oxley Act of 2002.

16. Public Utility​

• This is an entity that provides essential services such as electricity, gas, water, or telecommunications to the public.
• An entity qualifies for this exemption if BOTH of the following criteria apply:
  • The entity is a regulated public utility as defined in 26 U.S.C. 7701(a)(33)(A).
  • The entity provides telecommunications services, electrical power, natural gas, or water and sewer services within the United States.

17. Financial Market Utility​

• This is an entity critical to the functioning of the financial system, such as a central securities depository or clearinghouse.
• An entity qualifies for this exemption if the following criterion applies:
  • The entity is a financial market utility designated by the Financial Stability Oversight Council under section 804 of the Payment, Clearing, and Settlement Supervision Act of 2010.

18. Pooled Investment Vehicle​

• As the name suggests, this is an entity that pools investor money for investment purposes.
• An entity qualifies for this exemption if BOTH of the following criteria apply:
  • The entity is a pooled investment vehicle if EITHER of these statements apply to the entity:
    • Is an investment company, as defined in section 3(a) of the Investment Company Act of 1940; or
    • Is a company that would be an investment company under that section but for the exclusion provided from that definition by paragraph (1) or (7) of section 3(c) of that Act; and
    • Is identified by its legal name by the applicable investment advisor in its Form ADV, (or successor form) filed with the Securities and Exchange Commission or will be so identified in the next annual updating amendment to Form ADV required to be filed by the applicable investment advisor pursuant to rule 204-1 under the Investment Advisers Act of 1940.
  • The entity is operated or advised by any of these types of exempt entities:
    • Bank, as defined in Exemption 3.
    • Credit union, as defined in Exemption 4.
    • Broker or dealer in securities, as defined in Exemption 7.
    • Investment company or investment advisor, as defined in Exemption 10.
    • Venture capital fund adviser, as defined in Exemption 11.

19. Tax-Exempt Entity

• A non-profit organization with tax-exempt status under the Internal Revenue Code is called a Tax-Exempt Entity.
• An entity qualifies for this exemption of ANY of the following four criteria apply:
  • The entity is an organization that is described in section 501(c) of the Internal Revenue Code of 1986 (determined without regard to section 508(a) of the Code) and exempt from tax under section 501(a) of the Code.
  • The entity is an organization that is described in section 501(c) of the Code, and was exempt from tax under section 501(a) of the Code, but lost its tax-exempt status less than 180 days ago.
  • The entity is a political organization, as defined in section 527(e)(1) of the Code, that is exempt from tax under section 527(a) of the Code.
  • The entity is a trust described in paragraph (1) or (2) of section 4947(a) of the Code.

20. Entity Assisting a Tax-Exempt Entity​

• As the name suggests, this is an entity primarily engaged in supporting tax-exempt organizations.
• An entity qualifies for this exemption if all FOUR of the following criteria apply:
  • The entity operates exclusively to provide financial assistance to, or hold governance rights over, any tax-exempt entity described by Exemption 19.
  • The entity is a United States person as defined in section 7701(a)(30) of the Internal Revenue Code of 1986.
  • The entity is beneficially owned or controlled exclusively by one or more United States persons that are United States citizens or lawfully admitted for permanent residence. Lawfully admitted for permanent residence is defined in section 101(a) of the Immigration and Nationality Act.
  • The entity derives at least a majority of its funding or revenue from one or more United States persons that are United States citizens or lawfully admitted for permanent residence.

21. Large Operating Company​

• A company meeting specific criteria regarding size, revenue, and number of employees can be classified as a Large Operating Company.
• An entity qualifies for this exemption if all SIX of the following criteria apply:
  • The entity employs more than 20 full-time employees. In general, full-time employee means, with respect to a calendar month, an employee who is employed an average of at least 30 hours of service per week with an employer.
  • More than 20 full-time employees of the entity are employed in the United States, where the United States is defined as the States of the United States, the District of Columbia, the Indian lands, and the Territories and Insular Possessions of the United States.
  • The entity has an operating presence at a physical office within the United States. Operating presence at a physical office within the United States means that an entity regularly conducts its business at a physical location in the United States that the entity owns or leases and that is physically distinct from the place of business of any other unaffiliated entity.
  • The entity filed a Federal Income Tax or information return in the United States for the previous year demonstrating more than $5,000,000 in gross receipts or sales. If the entity is part of an affiliated group of corporations within the meaning of 26 U.S.C. 1504, refer to the consolidated return for such group.
  • The entity reported this greater-than-$5,000,000 amount as gross receipts or sales (net of returns and allowances) on the entity’s IRS Form 1120, consolidated IRS Form 1120, IRS Form 1120-S, IRS Form 1065, or other applicable IRS form.
  • When gross receipts or sales from sources outside the United States, as determined under Federal Income Tax principle, are excluded from the entity’s amount of gross receipts or sales, the amount remains greater than $5,000,000.

22. Subsidiary of Certain Exempt Entities​

• This is an entity owned or controlled by an exempt entity.
• An entity qualifies for this exemption if the following criterion applies:
  • The entity’s ownership interests are controlled or wholly owned, directly or indirectly, by any of these types of exempt entities:
    • Securities reporting issuer, as defined in Exemption 1.
    • Governmental authority, as defined in Exemption 2.
    • Bank, as defined in Exemption 3.
    • Credit union, as defined in Exemption 4.
    • Depository institution holding company, as defined in Exemption 5.
    • Broker or dealer in securities, as defined in Exemption 7.
    • Securities exchange or clearing agency, as defined in Exemption 8.
    • Other Exchange Act registered entity, as defined in Exemption 9.
    • Investment company or investment advisor, as defined in Exemption 10.
    • Venture capital fund advisor, as defined in Exemption 11.
    • Insurance company, as defined in Exemption 12.
    • State-licensed insurance producer, as defined in Exemption 13.
    • Commodity Exchange Act registered entity, as defined in Exemption 14.
    • Accounting firm, as defined in Exemption 15.
    • Public utility, as defined in Exemption 16.
    • Financial market utility, as defined in Exemption 17.
    • Tax-exempt entity, as defined in Exemption 19; or
    • Large operating company, as defined in Exemption 21.

23. Inactive Entity​

• This is an entity that has ceased operations or is no longer active.
• An entity qualifies for this exemption if all SIX of the following criteria apply:
  • The entity was in existence on or before January 1, 2020.
  • The entity is not engaged in active business.
  • The entity is not owned by a foreign person, whether directly or indirectly, wholly or partially. Foreign person means a person who is not a United States person. A United States person is defined in section 7701(a)(30) of the Internal Revenue Code of 1986 as a citizen or resident of the United States, domestic partnership and corporation, and other estates and trusts.
  • The entity has not experienced any change in ownership in the preceding 12-month period.
  • The entity has not sent or received any funds in an amount greater than $1,000, either directly or through any financial account in which the entity or any affiliate of the entity had an interest, in the preceding 12-month period.
  • The entity does not otherwise hold any kind or type of assets, whether in the United States or abroad, including any ownership interest in any corporation, limited liability company, or other similar entity.