Sources of financing include friends and relatives, individual investors, public and private pension funds, institutional investors such as insurance companies and investment companies, venture capital firms and the public markets. Raising capital from these sources, however, brings into play complex state and federal securities laws.
Registration or Exemption
Federal securities laws apply to every sale of securities in any state, including Ohio, regardless of the type of business entity or the sale price of the securities. Likewise, the Ohio Securities Act is applicable to every sale of securities in Ohio, and other states have similar statutes. Both state and federal laws require registration with a regulatory body unless an exemption from registration is available.
The securities laws were enacted to protect investors. These laws focus on disclosure to investors, providing them with all information that is material to the investment decision. The securities laws and regulations specify the types of information which must be disclosed to investors. An effective guide through these provisions is essential.
For example, for a private placement of securities we would perform the following tasks:
- Evaluate and help structure the form of entity in order to permit the offering to proceed as planned.
- Prepare a Private Offering Memorandum, Subscription Agreement, Investor Questionnaire, and various authorizing Resolutions.
- Take steps necessary to “Blue Sky” the securities in the state of Ohio and to take steps to qualify the securities in other states if necessary.
- In addition to preparing the documents and making the filings described above, oversee necessary filings with applicable regulatory agencies.
For over 40 years, Carlile Patchen & Murphy has helped clients through the rigorous process of regulatory compliance. Our thorough technical knowledge of state and federal securities laws, creativity in structuring transactions, experience in negotiating transactions with investment bankers, institutional investors and venture capitalists result in compliance and innovation in executing your business concept.