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Tagged Posts: general solicitation’

Additional Ways I Can Sell or Allocate Ownership of My Company Without Registering Stock, LLC or Other Interests: Discussion of Common Exemptions Roundup (Post 3)

February 23, 2016

Employee Equity Compensation Under Rule 701.

Rule 701 allows companies to offer securities to their employees and certain other persons without the need to file a registration statement.  Specifically, non-reporting or private companies may offer and sell securities under a written compensatory benefit plan or contract for their employees, directors, general partners, trustees, and officers, as well as consultants and advisors who are natural persons and provide bona fide services outside of a capital-raising transaction.[1]  A “compensatory benefit plan” is defined as “any purchase, savings, option, bonus, stock appreciation, profit sharing, thrift, incentive, deferred compensation, pension, or similar plan.”[2]  The SEC’s policy consideration behind adopting this rule was that it would be an unreasonable burden to require private companies, many of which are small businesses, to incur the expenses and disclosure obligations of public companies when they offer securities to their employees for compensatory, rather than capital-raising, purposes.… Read the rest

Additional Ways I Can Sell or Allocate Ownership of My Company Without Registering Stock, LLC or Other Interests: Discussion of Common Exemptions Roundup (Post 2)

February 16, 2016

Offshore Offerings Under Regulation S.

Companies that want to go outside of their own state for an alternative source of capital but do not want to go through the registration requirements might want to consider Regulation S.  Regulation S provides an exemption for offers and sales of securities, debt or equity, outside the United States, on the following general conditions:

  • The offer or sale is made in an offshore transaction; and
  • No directed selling efforts are made in the United States, meaning no activity undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for the securities offered, such as an advertisement in a publication with a general circulation in the United States.
… Read the rest

Additional Ways I Can Sell or Allocate Ownership of My Company Without Registering Stock, LLC or Other Interests: Discussion of Common Exemptions Roundup (Post 1)

February 9, 2016

Exempt Offerings for Other Types of Markets or Purposes.

In our previous blog series on raising capital through exempt offerings (available here), we looked at some of the most commonly used exemptions from the federal registration requirements, including those under the JOBS Act.  In another blog series on Regulation D offerings (available here), we focused on various exemptions under Regulation D and discussed why Rule 506 remains the most dominant exemption of all to date.  In all likelihood, the exemptions covered in those two series are about all of the common exemptions that companies seeking to raise capital in the United States would consider absent special circumstances, but there are also exemptions that are designed for other types of markets or purposes.  … Read the rest

Crowdfunding Gone Wrong: Some Points of Caution SEC Investor Alert: Ascenergy LLC Oil and Gas Crowdfunding Scheme

January 19, 2016

We’ve covered crowdfunding extensively in our previous posts “Crowdfunding: Is It Right for My Business,” “Is It Time To Do Crowdfunding To Raise Money?: SEC Releases Federal Crowdfunding Rules,” and “An Easy Way for Texas Companies To Raise Money? A Discussion of the Texas Crowdfunding Exemption.” As crowdfunding gains popularity, not only has it proved to be a process of trial and error (see, for example, our previous posts “Eureeca: A Cautionary Tale on How Not To Do Crowdfunding” and “Update on Eureeca Capital”), but schemes to defraud unsophisticated investors with the allure of crowdfunding also seem to have been on the rise.… Read the rest

Clarifying How Companies Can Raise Money: Making Things a Little Clearer And, Perhaps, Easier? SEC Proposes Amendments to Rule 147 Intrastate Exemption and Rule 504 of Regulation D (Part 2)

January 14, 2016

More on the Rules for an Offering in a Single State

Rule 147 Intrastate Exemption: Proposed Amendments.

The proposed amendments would: (1) eliminate the current restriction on offers, while continuing to require that sales be made only to residents of the issuer’s state; and (2) redefine what it means to be an “intrastate offering” and ease some of the issuer eligibility requirements, among other things. The SEC noted that the use of the Internet for offerings makes it difficult for issuers to limit offers to in-state residents, especially in the context of intrastate crowdfunding.… Read the rest

Clarifying How Companies Can Raise Money: Making Things a Little Clearer And, Perhaps, Easier? SEC Proposes Amendments to Rule 147 Intrastate Exemption and Rule 504 of Regulation D (Part 1)

January 7, 2016

October was a busy month for the Securities and Exchange Commission (SEC). On October 30, 2015, the day the agency finally voted to adopt the crowdfunding final rules, it also issued proposed rules to amend: (1) Rule 147, which currently provides a safe harbor for compliance with the intrastate exemption; and (2) Rule 504 of Regulation D, which provides an exemption for certain offerings conducted in compliance with applicable state law.[1] (For more discussion on Rule 504 of Regulation D) The full text of the proposed rules is available here.… Read the rest

More Clarification on How To Raise Money Without Registration: SEC Issues Compliance and Disclosure Interpretations on Exempt Offerings (Part 4)

November 12, 2015

Intrastate Exemption.

We briefly touched on the concept of intrastate exemption in our previous blog series on crowdfunding (available here). As the name suggests, intrastate offerings are transactions that do not involve interstate commerce (hence the exemption, as being outside of the scope of the Securities Act of 1933). This is important because, to qualify for the intrastate offering exemption under Rule 147, the transaction must be “genuinely local in character,” i.e., local financing by local industries carried out through local investment.… Read the rest

More Clarification on How To Raise Money Without Registration: SEC Issues Compliance and Disclosure Interpretations on Exempt Offerings (Part 3)

November 5, 2015

General Solicitation.

As we discussed in our previous blog series on exempt offerings (available here), absence of general solicitation is a condition to be met in most exempt offerings, with limited exceptions, such as offering under Rule 506(c).  This is important because, to qualify for an exemption from registration, an issuer must meet all the requirements of the exemption.  General solicitation includes, without limitation, any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media or broadcast over television or radio,[1] as well as other uses of publicly available media, such as unrestricted Web sites.… Read the rest

All postings are intended to be planning tools to familiarize readers with some of the high-level issues discussed therein. No posting is intended to be a comprehensive discussion and additional details should be discussed with your transaction planners including attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity.


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