The offering of a Private University does not need to be registered with the Securities Exchange Commission. It is a non-profit educational center and is exempt from registering securities. According to the Securities Act of 1933, the following organizations are exempt from registering securities with the Securities and Exchange Commission; non-profit educational, religious, fraternal, charitable, or benevolent organizations. Private University is a non-profit center and falls under this category.
The securities would also be exempt from registration if offered in California, where it is located. Rule 147 of the Securities Act of 1933 dictates that securities may be exempt from registration if sold within a state at least for the first nine months (Lidstone., 2016). In this case, the securities should be limited within California, where the university is located. It is said that the initial purchaser may sell the shares without restriction. Private universities should restrict internet advertising, and the sale of shares should be restricted within California to be exempt from registration.
Private universities can also be exempted from registering the securities because of the low value of the securities involved. Rule 504 exempts from registration securities with a worth under one million dollars. The value was revised in 2017 to five million dollars (SEC., 2017). Therefore, Private University does not have to register their securities as their value is below five million dollars.
The university would have to register the securities with the SEC. A for-profit organization is not exempt from registering securities. Additionally, trading across 50 states makes it interstate selling of securities and is not exempt from registering securities. Only intrastate trading is exempt from registering securities.
Lidstone, H., K. (2016). Securities exemptions – amended and reinterpreted. Web.
U.S. Securities and Exchange Commission. (2017). Rule 504 of regulation D: A small entity compliance guide for issuers. Web.