Why Can’t I Generate Rule 701 Report?

Have you faced any problems checking Rule 701 eligibility?

Companies may issue stocks or stock options under Rule 701 exemption without registering the securities under the Securities Act. 

Note: The Rule 701 feature is only available for premium account holders. Kindly upgrade your account to unlock this feature. 

REASON 1

Once a company account has been created on Eqvista, you must add shareholders to your company. 

Note: You can add a shareholder while issuing shares, options, warrants, or convertible notes by clicking the option “Add Shareholder”.

Make sure you have created a shareholder profile. 

Log into your Eqvista account and select the company account. Then, click on “Shareholders” on the left-hand side of the dashboard.

Note: If there are 20 shareholders in your company profile and you want to add more, kindly upgrade your account. 

Here you will see all the shareholders created.

REASON 2

The securities issued must be Common shares, Preferred shares, Options, or Warrants. The secondary transactions performed on the above grants are also eligible for Rule 701. 

The system considers the grant issuance date and the selected end date for eligibility criteria. The reason is that the Rule 701 exemption is based on sales made within the preceding 12-month period of the selected end date. 

For example, if the selected end date is June 29th 2024, the system will consider all the grants issued between June 29th 2023 to June 29th 2024 for checking the eligibility.

Here is an example of a grant eligible for Rule 701 exemption.

An example of a grant not eligible for Rule 701 exemption since the grant issuance date does not fall within the specific end period. 

REASON 3

To qualify for Rule 701 exemption, the company must meet one of the three qualification criteria.

Note: To know more in detail about the qualification criteria, check out our support article here!

Let’s consider an example that illustrates the criterion has “Passed” and “Failed”.

The system calculates the value of all 3 qualification criteria, finds the highest case, and applies that as the “Greatest Value to Compare”.  

When it “Fails” in this particular criterion, we still need to continue checking the other criteria. If it fails all the 3 criteria, you will be “Not Qualified”. 

To know more about Eqvista’s features, check out our support articles and knowledge base. For further queries, get in touch with us!