We assist startups and growth-stage companies with Form D, Rule 504 and 506 exemptions, and state blue sky laws and have helped guide businesses through securities compliance requirements for multimillion dollar rounds.
If you’re raising capital for a private fund, we advise general partners and fund managers on fund structure, registration, and securities exemptions, including filing Form ADV and qualifying for exemption under Rule 203(m)-1.
We also assist VCs in forming venture capital funds, including structuring the limited partnership agreement, private placement memorandum, and the fund itself for exemption under Rule 203(l)-1 and Section 3(c) of the Investment Company Act.
If you’ve never worked with a Columbus securities lawyer, securities laws can be confusing and intimidating. From raising funding and venture capital to private placements, companies that issue securities must ensure that they comply with federal and state securities laws. Generally, a company that issues securities must either qualify for an exemption or register with a regulatory body, such as the Securities and Exchange Commission (SEC) or the Ohio Division of Securities.
To the consternation of both clients and attorneys, it can be puzzling as to when federal securities laws apply and when state securities laws apply. Further, there can sometimes be multiple routes to achieving securities compliance and specific exemptions. How our attorneys advise clients to approach securities and securities laws will often turn on a number of factors. These can include to what extent the clients operate in Ohio, whether the financing transactions occur with investors in Ohio, throughout the US, or even international, the amount and frequency of capital being raised, the ultimate goals of our clients in raising capital.
Our Ohio securities attorneys are experienced in working with the different securities regulatory agencies, including the Securities and Exchange Commission and the Ohio Division of Securities. Our firm’s securities practice includes registration, exemptions, and securities consulting. We held advise businesses and investors on a range of securities offerings, including exempt offerings and private placements.
Our Columbus securities lawyers help businesses navigate the complex framework of federal regulations including the Securities Act of 1933, the Securities Exchange Act of 1934, and the U.S. Foreign Corrupt Practices Act and state blue sky laws such as the Ohio Securities Act. Our Columbus securities lawyers advise clients on all aspects of securities laws, including transactional and investment securities issues, venture capital, private placements, and startup fundraising.
Our Columbus securities lawyer works with startups and businesses, advising on federal and state securities exemptions for fundraising, accredited investors, and non-accredited investors. This includes traditional exemptions such as Rule 504 and Rule 504(b)(1)(i), Rule 504(b)(1)(ii), and Rule 504(b)(1)(iii), Rule 506(b), and Rule 506(c).
In terms of the two more popular exemptions, Rule 506(b) and Rule 506(c), our Ohio securities attorneys work closely with our clients to structure their securities offerings under these exemptions. This includes advising on verifying accredited investor status, necessary investor representations and restrictions, whether to raise funding from non-accredited investors, and disclosure requirements for accredited and non-accredited investors. We assist with Form D filings with the SEC and notice filings with every applicable state where investors may reside. Our securities attorneys also advise as to compliance with general solicitation under Rule 506(c) and can assist with issues that may arise with “bad actors” disqualification.
For businesses that may be considering fundraising through Kickstarter or another online platform, our Columbus securities attorneys also advise on crowdfunding and Title III of the JOBS Act. We work with startups to assist with securities compliance for crowdfunding, including disclosure requirements and investor limitations.
For startups that are considering raising tens of millions of dollars, we also advise on Regulation A+. We help guide companies through the Tier 1 or Tier 2 requirements, including filing offering statements and disclosure requirements.
Our Ohio securities attorneys also work with clients to form private equity funds. We assist and advise with structuring of the general partner entity, structuring the fund entity itself and raising capital, drafting the private placement memorandum, and all ancillary documents associated with forming a fund (including the subscription agreement). As a part of this, we advise on pursuing exemption under 3(c)(1) and 3(c)(7) of the Investment Company Act. Our securities attorneys also guide clients through the process of completing Part 1 and Part 2 of Form ADV and pursuing the private fund adviser exemption under 203(m) of the Investment Advisers Act.
Contrary to the popular belief of some, securities aren’t just stocks and bonds that you buy through your broker as a part of your investment portfolio. By law, securities can include any investment contract, note, security future, debenture, or certificate of deposit.
Some startup founders may assume that to avoid securities laws, instead of issuing equity, the company will just issue debt. This can lead to regulatory action in the future. In some circumstances, certain debt such as promissory notes, can qualify as securities. Our securities lawyers advise startups and businesses on whether securities laws apply and which exemptions may be preferred.
Another common misconception is that securities laws do not apply to members in an LLC. LLC members point to the fact that they have an operating agreement, assuming that this is all they need to comply with LLC formation requirements and best practice recommendations.
In some circumstances, securities laws very much apply to certain LLCs and certain members. Operating agreements can be deemed to be investment contracts and without a proper exemption or compliance, LLC founders can find themselves dealing with serious securities violations issues arise in the future. Members who are more “passive” in the LLC should especially take the time to consider securities compliance.
Under Ohio Revised Code Chapter 1707, the definition of securities in the State of Ohio is fairly broad. Securities in Ohio can include oral, written, or electronic agreements, or even understandings or opportunities. Beyond stock or certificates for shares of stock, securities can also include membership interests in limited liability companies, warrants and options, promissory notes, bonds, and other evidences of indebtedness.
Ohio securities laws do, however, offer a number of exemptions. These include one of the more popular exemptions for smaller offerings under Ohio Revised Code 1707.03(O), in the event the capital raise is for 10 or fewer residents of the State of Ohio. Our Ohio securities attorneys are able to advise on this and other Ohio securities exemptions.