Walter Devins, Attorney
How are you raising capital for your business or startup company? Have you ever considered the implications of federal and state securities laws?
So then, to whom and when do securities laws apply? The actual statute is very complex; you should contact an attorney for more detailed information. However, I will list of several examples below:
- Raising funds by selling stock or interest of your company to anyone that is not actively working for the business, including friends and family. This business is issuing securities
- Raising funds by publicly offering shares of your business. This business is issuing securities
- A business is started in order to invest into real estate, and there is a buy in amount to participate in the company’s investments. This business is issuing a security.
Now that we have some examples of businesses that issue a security, what does it matter? Under federal and state law, an issuer of securities must register with the SEC and the appropriate state authority, or it must file for an exemption to registration. The registration process is very complicated and time consuming. Most try to fit into one of the federal and state exemptions. However, obtaining an exemption limits specific actions and sales techniques. An exemption also limits to whom the securitiy can be sold, and it requires specific forms and action on part of the business.
If you are concerned or interested in learning more, please contact our firm and we can help.
Harrison & Devins, PA