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.Managers who are organizing an investment fund (or even raising money for an operating company) at times want to make the investment more attractive to investors by adding provisions that require at least some payments to the investors before...
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Given the securities laws, one probably ought not to be surprised that there are restrictions on who can be involved in the sale of an offeror's securities. Generally the top officers of the company can sell the securities, although there are...
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If an offeror is making an offering that does not allow public advertising, such as a traditional Rule 506 offering, then according to the SEC a pre-existing substantive relationship is required before a potential investor can invest. ...
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Foreign investors in U.S. companies can be handled one of two ways. One way to deal with non-U.S. investors is to treat them exactly like U.S. investors. Another option, though, is to use federal Regulation S with foreign...
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Information to Be Provided When There Are Non-Accredited Investors
One provision of SB 978 requires the offering company to provide additional information regarding the nature of the proposed offering on a form prescribed by the Commissioner of...
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A number of years ago the SEC effectively banned the use of finders to locate investors for securities offerings that cross state lines. Still, a few states allow finders for their intrastate offerings (offerings made entirely within that...
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The California 25102(n) offering exemption is one of the few that allows some public advertising. Non-California companies that do more than half their business in California can use this exemption as well – or perhaps form a California...
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Given that the SEC is on the verge of releasing its final regulations that will allow public advertising of Rule 506 offerings, it’s a good time to review traditional Rule 506 offerings.
A Rule 506 offering is the primary type of private...
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Although it takes more time and effort than other types of offerings, a California qualification by permit (25113) offering has major advantages in terms of allowing public advertising and having low investor requirements.
The offering can...
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For those of you who are or may be making offerings in California, this is an update on the latest regarding the new California regulations regarding investment advisers. This is important because the California Department of Corporations (DOC)...
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As mentioned last time, there are many ways to structure securities to be sold in an offering. How they are structured requires balancing what is attractive to investors with what the company can live with.
In terms of equity offerings, for...
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There are many ways to structure securities to be sold in an offering. How they are structured requires balancing what is attractive to investors with what the company can live with.
The basic types of securities are debt and equity, but...
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One basic rule in securities offerings is that in the disclosure document the offeror must disclose everything that a potential investor would reasonably want to know before investing. (“Disclosure document” basically means...
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For a long time managers of many funds were not required to register as investment advisers. This is changing and fund managers (or would-be fund managers) now have a number of important requirements to meet. The changes affect funds that...
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Today (August 29, 2012) the Securities & Exchange Commission (SEC) released its long-awaited proposed regulations for public advertising of Rule 506 offerings. This is pursuant to the JOBS ACT that was signed this past April. It is...
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If a company makes two securities offerings too close together, the securities regulators may consider the two offerings “integrated”, meaning two parts of a single offering. That can violate the requirements of the securities...
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This is a brief update on the status of the JOBS Act. The SEC has said that it will have the regulations for public advertising of Rule 506 offerings out by the end of the summer. It has also said that it will have the regulations for...
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Many clients want to know whether their promissory notes are securities. If they are securities, then the securities laws procedures have to be followed when the notes are issued. If they are not securities, then there is no need for...
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Several securities-offering exemptions allow “sophisticated investors” to invest. The question is how to determine when potential investors are sophisticated.
Federal Rule 506 offerings (and the California 25102(f) offering)...
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The investor subscription agreement is the third major document used in private placement securities offerings, along with the investor questionnaire and the private placement memorandum or PPM. A number of provisions should be included...
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A private placement memorandum or PPM is the main information document for potential investors. It’s like a business plan on steroids, adding required and recommended details and legal language for an offering. It goes by many...
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One thing to consider when planning an offering is what investor qualifications you can live with. In making this decision it’s important to keep in mind that the definition of “accredited investor” is now more limited than it...
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The Securities & Exchange Commission (SEC) has made it clear that a minimal “check the box” approach is not sufficient.
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Many offerings to investors require that forms be filed with one or more securities agencies within 15 days of the first sale. Still, even if the forms were not filed on time, it’s often possible to file them even though they are...
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For companies that need some form of advertising and need to raise money immediately, the California 25102(n) exemption and the Model Accredited Investor Exemption (MAIE) that approximately 30 states have adopted allow the use of a...
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President Obama signed the A Jumpstart Our Business Startups Act (the JOBS Act) on April 5. Part of this Act authorizes crowdfunding for the first time. (Up until now, crowdfunding could only be done legally by a company effectively...
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President Obama signed the “Jumpstart Our Business Startups Act” (the JOBS Act) on April 5. This bill will make it substantially easier for companies to raise money although key provisions do not take effect immediately. Two parts of the...