Comply with the SEC
The Securities and Exchange Commission ("SEC") requires that businesses
not sell securities privately or publicly, under the guise of materially
misleading statements or omissions. Specifically, the SEC and the State
Department of Corporations have numerous rules regarding the type of
information can be disclosed to investors, when it can be disclosed, and
what type of investors may invest depending on the type and size of each
Offering. Proper drafting of all documents associated with an
Investment Offering will address all of these concerns.
Develop and
document a legal structure for your offering
An Investment Offering
expands upon the organizational structure set forth in your initial
corporate bylaws. While the bylaws are usually drafted to allow an
entity long-term flexibility, the Offering usually pertains to a unique
project. An Offering is more specific about the responsibilities,
compensation and potential conflicts of interest regarding the parties
involved. The Offering usually sets forth terms as to how investors can
invest, how they will share in profits and losses, and how their
principal will be returned.
Limit liability of the issuer and investor
By disclosing the risks associated with the Offering, potential
conflicts of interest, and any relevant SEC exemptions under which the
securities are being offered, an issuer can use an Offering to limit
liability. Furthermore, a shrewd investor will want investment terms
documented in an Offering, so that he may bind the company with which he
is investing.
Provide an image of professionalism
A properly drafted Investment Offering with all relevant disclosures
and attachments will generally do more to impress investors than scare
them away. Almost all privately-held companies with a need to raise
capital must use Investment Offerings to comply with state and federal
securities laws. A seasoned investor will undoubtedly take a proposal
more seriously if presented in a legal form.
Expand marketing options for your securities
Most Offerings can be structured to comply with a variety of SEC
exemptions, each with varying benefits to the issuer. By preparing an
Offering, you will develop a better understanding as to how you can best
market your securities.
