Intrastate offering involves only offering a company’s stock to investors within the state where the company resides. A common reason for making an intrastate offering is to avoid having to contend with SEC regulations. The Securities Act of 1933, usually called the Intrastate Offering Exemption, makes it possible for companies to not need to register their securities with the SEC, but only under specific conditions that the company issuing the intrastate offering both does business and is based out of the state where the offering is going to be made.
In order to qualify for intrastate offering, a company must be a legal corporation in the state the offering is going to be made, must only issue its securities to residents of the state, and must do most of its business in the state. There are fairly strict laws on intrastate offering, for the responsibility falls on the company to validate that no one it offers or sells securities to lives outside the state. Also if the company violates this, or if within nine months of the date the company issued the securities even one of the securities is resold by its holder to someone who resides out the state, there can be serious legal complications for the company. For these reasons it is usually best for a company that wishes to make an intrastate offering to closely pay attention to anyone it offers security options to.
Those companies that are able to meet these requirements can save a large amount of money by not having to register with the SEC.
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