N.D. Cent. Code § 10-04-05

10-04-05. Exempt securities

Sections 10-04-04, 10-04-07.1, 10-04-07.2, 10-04-08, and 10-04-08.4 do not apply to any of

the following securities:

1. A security, including a revenue obligation or a separate security as defined in rule 131

adopted under the Securities Act of 1933, issued, insured, or guaranteed by the United

States, by a state, by a political subdivision of a state, by a public authority, agency, or

instrumentality of one or more states, by a political subdivision of one or more states,

or by a person controlled or supervised by and acting as an instrumentality of the

United States under authority granted by the Congress, or a certificate of deposit for

any of the foregoing, except that this exemption does not include a municipal security

with respect to the offer or sale in this state if the security is payable solely from

revenues to be received from a nongovernmental industrial or commercial enterprise,

unless such payments are made or unconditionally guaranteed by a person whose

securities are exempt from registration or the issuer first files a notice in a record

specifying the terms of the proposed offer or sale and pays a nonrefundable filing fee

of one hundred dollars.

2. Securities issued by and representing or that will represent an interest in or a direct

obligation of, or be guaranteed by a banking institution organized under the laws of the

United States, a member bank of the federal reserve system, or a depository institution

a substantial portion of the business of which consists or will consist of receiving

deposits or share accounts that are insured to the maximum amount authorized by

statute by the federal deposit insurance corporation, the national credit union share

insurance fund, or a successor authorized by federal law or exercising fiduciary

powers that are similar to those permitted for national banks under the authority of the

comptroller of currency pursuant to section 1 of Public Law 87-722 or issued or

guaranteed as to both principal and interest by an international bank of which the

United States is a member.

3. Securities issued by a building and loan association subject to supervision by an

agency of the state of North Dakota, or policy contracts, including variable annuity

contracts, of an insurance company subject to supervision by an agency of the state of

North Dakota.

4. Securities issued or guaranteed by a railroad, other common carrier, public utility, or

public utility holding company that is regulated in respect to its rates and charges by

the United States or a state, regulated in respect to the issuance or guarantee of the

security by the United States, a state, Canada, or a Canadian province or territory, or a

public utility holding company registered under the Public Utility Holding Company Act

of 1935 or a subsidiary of such a registered holding company within the meaning of

that Act.

5. Any security issued by any person organized and operated not for private profit but

exclusively for religious, educational, benevolent, fraternal, charitable, social, or

reformatory purposes; provided that prior to any offer of such security each person

must meet the following conditions:

a. Apply for and obtain the written approval of the commissioner.

b. File an application, offering disclosure document, and pay a nonrefundable filing

fee of one hundred fifty dollars, which document and fee must accompany the

application.

c. File a notice identifying the basis of its qualification under this exemption with

such additional information as the commissioner may require.

d. Provide a copy of the offering disclosure document to each person to whom an

offer to sell or sale is made.

The approval is effective for a period of one year from the date of approval. At least

thirty days prior to the expiration date, there must be filed an application, offering

disclosure document, and a nonrefundable fee of one hundred dollars for the renewal
commissioner may require.

d. Provide a copy of the offering disclosure document to each person to whom an

offer to sell or sale is made.

The approval is effective for a period of one year from the date of approval. At least

thirty days prior to the expiration date, there must be filed an application, offering

disclosure document, and a nonrefundable fee of one hundred dollars for the renewal

of the filing for additional periods of one year.

6. Any note, draft, bill of exchange, or bankers' acceptance which arises out of a current

transaction or the proceeds of which have been or are to be used for current

transactions, is not the subject of a public offering, is prime quality negotiable

commercial paper which has at the time of issuance a definite maturity of not

exceeding nine months, is payable in cash only, and is not convertible into and does

not carry an option or right to receive payment or any bonus in any other security.

7. Securities, other than common stock, providing for a fixed return, which have been

outstanding and in the hands of the public for not less than five years and upon which

no default has occurred during the five years next preceding the date of sale.

8. Securities, including patronage dividends or refunds, issued by any cooperative

organized under the statutes of this state.

9. An equipment trust certificate with respect to equipment leased or conditionally sold to,

a person, if any security issued by the person would be exempt under this section or

would be a federal covered security under section 18(b)(1) of the Securities Act of

1933.

10. Any bond, note, or other evidence of debt issued by a holding corporation or limited

liability company and secured by collateral consisting of any of the securities described

in subsections 4 and 9, if the collateral securities equal in fair value at least one

hundred twenty-five percent of the par value of the bonds, notes, or other evidences of

debts secured thereby.

11. The execution of orders for purchase of securities by a registered broker-dealer

provided such broker-dealer acts as agent for the purchaser, has made no solicitation

of the order to purchase such securities, has no direct material interest in the sale or

distribution of the securities ordered, receives no commission, profit, or other

compensation other than the commissions involved in the purchase and sale of the

securities and delivery to the purchaser of written confirmation of the order which

clearly itemizes the commissions paid to the registered broker-dealer. Clear and

complete records of all transactions exempted under this subsection shall be

maintained by the registered broker-dealer.

12. Any security issued, insured, or guaranteed by a foreign government with which the

United States currently maintains diplomatic relations, or any of its political

subdivisions, if the security is recognized as a valid obligation by the issuer, insurer, or

guarantor.

13. a. A federal covered security specified in section 18(b)(1) of the Securities Act of

1933 or by rule adopted under that provision or a security listed or approved for

listing on:

(1) The New York stock exchange;

(2) The American stock exchange;

(3) The national association of securities dealers automated quotation national

market system;

(4) Tier I of the Philadelphia stock exchange, incorporated;

(5) Tier I of the Pacific exchange, incorporated;

(6) Chicago board options exchange, incorporated; or
der that provision or a security listed or approved for

listing on:

(1) The New York stock exchange;

(2) The American stock exchange;

(3) The national association of securities dealers automated quotation national

market system;

(4) Tier I of the Philadelphia stock exchange, incorporated;

(5) Tier I of the Pacific exchange, incorporated;

(6) Chicago board options exchange, incorporated; or

(7) Any other stock exchange or automated quotation system which the

securities and exchange commission approves by rule.

b. A put or call option contract; a warrant; a subscription right on or with respect to

such securities; or an option or similar derivative security on a security or an

index of securities or foreign currencies issued by a clearing agency registered

under the Securities Exchange Act of 1934 and listed or designated for trading on

a national securities exchange, a facility of a national securities exchange, or a

facility of a national securities association registered under the Securities

Exchange Act of 1934 or an offer or sale, of the underlying security in connection

with the offer, sale, or exercise of an option or other security that was exempt

when the option or other security was written or issued; or an option or a

derivative security designated by the securities and exchange commission under

section 9(b) of the Securities Exchange Act of 1934.

14. Securities issued by North Dakota united dues credit trust to members of North Dakota

united.

15. A security of a foreign issuer that is a margin security defined in regulations or rules

adopted by the board of governors of the federal reserve system.