Series 63 practice questioneasyPreorganization Subscriptions
Preorganization subscriptions are exempt from registration under the USA if they meet which of the following conditions?
- ANo more than 10 subscribers and no payments made by subscribers✓ Correct answer
- BNo limit on number of subscribers, but payments are required
- CNo more than 35 subscribers and payments are made
- DOnly institutional investors are allowed to subscribe
Explanation
Why A — No more than 10 subscribers and no payments made by subscribers
Per USA Section 402(b)(2), preorganization certificates are exempt if there are no more than 10 subscribers and no payments made. The other options fail to meet both criteria or add unsupported requirements.
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