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Exemption will allow venture capitalists to freely invest in Indiana businesses without risk of violating Indiana securities laws.
INDIANAPOLIS (August 30, 2011) – Indiana Secretary of State Charlie White announced today that his Indiana Securities Division extended a policy to grant managers of venture capital firms an exemption from registration as investment advisers. The Securities Division recognized that the traditional state investment adviser regulatory model does not fit with managers of venture capital funds but that the definition of “investment adviser” in the Indiana Uniform Securities Act may include them.. In 2008 the Securities Division issued a Statement of Policy exempting those managers. Because of the Dodd-Frank Act, that policy needed an update, which the Securities Commissioner signed yesterday.
This move comes days after White made two appointments designed to assist Indiana businesses incorporating within the state. The hiring of the office’s first Chief Information Officer and the merging of the Business Services and Information Technology departments resulted from a dramatic increase in electronic business filings and other IT heavy projects over the last decade. Today’s announcement comes as part of an ongoing effort to help small businesses grow by using every available resource in the office’s four divisions.
“Small businesses drive our economy, and our office is dedicated to helping those businesses grow and survive.” White said. “These small changes in the law can have a huge impact, and I’m glad we were able to remove unnecessary regulation today.”
The measure was initially requested by the Indiana Economic Development Corporation and local venture community attorneys. It is seen as a boon for small business since it allows venture capital funds to operate freely and without regulatory burdens. Venture capital funds can make investments in legitimate Indiana small businesses without fear of acting as unregistered investment advisers in violation of Indiana securities laws. While completely exempt from securities licensing requirements, fund managers remain subject to other laws dictating fraud.
The Administrative Order is the temporary solution for venture capital funds. The Securities Division plans to initiate the rule-making process in 2011 for a more permanent solution.
Click here to view the administrative order.
Deputy Chief of Staff