Series 63 practice questionmediumPreorganization Subscription—Payment Rules
Which of the following would invalidate the preorganization subscription exemption under the Uniform Securities Act?
- AHaving 8 subscribers who pay for their interests before the organization is formed✓ Correct answer
- BHaving 8 subscribers who have not paid for their interests until the organization is formed
- CHaving 10 subscribers who make no payment until the organization is formed
- DHaving 10 subscribers who have not paid for their interests
Explanation
Why A — Having 8 subscribers who pay for their interests before the organization is formed
Advance payment before formation defeats the preorganization-subscription exemption. The exemption also requires no more than 10 subscribers and no commission for solicitation; the revised C and the original B/D satisfy the facts stated.
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