{"id":243,"date":"2019-11-29T21:39:09","date_gmt":"2019-11-29T21:39:09","guid":{"rendered":"http:\/\/callenderpllc.com\/?page_id=243"},"modified":"2021-04-27T18:33:43","modified_gmt":"2021-04-28T00:33:43","slug":"private-placements","status":"publish","type":"page","link":"https:\/\/callenderlawfirm.com\/index.php\/practice-areas\/private-placements\/","title":{"rendered":"Private Placements"},"content":{"rendered":"\n

Private Placements<\/strong> Practice Overview<\/strong><\/h4>\n\n\n\n

Raising money for a business is challenging in any environment, \n\t\t\tbut it is especially so in today’s tumultous capital markets.<\/p>\n\n\n\n

The objective of our private placements focus area is to provide personalized \n\t\t\toutside general counsel services to small businesses and entrepreneurs, thereby enabling them \n\t\t\tto grow, build, and innovate \n\t\t\tenterprises that develop and improve products and services, provide \n\t\t\temployment opportunities, revitalize communities, and sustain \n\t\t\tAmerican innovation and global competitiveness. <\/p>\n\n\n\n

As <\/a>business advisory attorneys<\/a>, we listen to our clients, develop understanding of their business plan and goals, craft the best legal solution that satisfies their business needs, and provide appropriate counsel.<\/p>\n\n\n\n

The Callender Law Firm<\/a> provides a full suite of <\/a>business<\/a> and <\/a>financial<\/a> law services, including preparation of private placements offering documents under Regulation D (or Reg D) of the Securities Act of 1933, and assists business clients seeking to raise money through private placements.<\/p>\n\n\n\n

Regulation D Private Placements Offerings<\/strong><\/p>\n\n\n\n

When a company raises money by selling \n\t\t\tstock, bonds, membership interests, limited partnership interests, \n\t\t\tlimited liability company (LLC) interests, or any other \u2018investment \n\t\t\tcontract\u2019, it is selling securities and must comply with applicable \n\t\t\tfederal and state securities laws. This rule applies regardless of \n\t\t\tthe form of compensation received in exchange for the security, for \n\t\t\texample, cash, stock in another company, services, or any other \n\t\t\tproperty.<\/p>\n\n\n\n

The Securities Act of 1933 requires SEC (Securities and Exchange Commission) registration of any offer to sell securities unless the offering company meets requirements of a specific exemption. Rules 504, 506 (b), and 506(c) of Regulation D provide exemptions from registration requirements that allow some companies to offer and sell their securities without the requirement of registering the securities with the SEC. To qualify for an exemption, a company must meet specific requirements of the exempting rule. As with any security offering, whether exempt from registration requirements or not, both Federal and applicable state \u201cBlue Sky\u201d laws regulating securities require reasonable and full disclosure to purchaser prospects. The Private Placement Memorandum<\/strong><\/em> (or PPM<\/strong><\/em>) is the main disclosure document in a Regulation D private placement offering. <\/p>\n\n\n\n

Under Texas law (Rule 139.19, Tex. Admin. \n\t\t\tCode, Title VII), companies satisfying requirements substantially \n\t\t\tsimilar to those of Reg D Rule 506 are exempt from registration \n\t\t\trequirements of the Texas Securities Act if they offer and sell \n\t\t\ttheir securities to \u201caccredited investors\u201d. This is known as the \n\t\t\tAccredited Investor Exemption.<\/p>\n\n\n\n

Although companies using a Regulation D  Rule 504, 506(b), or 506(c) exemption are not required to register their securities and generally do not have to file reports with the SEC, they must file a “Form D” after first selling their securities. Form D<\/strong><\/em> is a brief notice that includes the names and addresses of the company\u2019s executive officers and stock promoters, but contains little other information about the company. The SEC requires electronic filing of Form D and disclosure of the date of first sale in the offering.<\/p>\n\n\n\n

Rule 504 Exemption. <\/em><\/strong>Under Rule 504 of Reg D, a qualifying company is exempt from the registration requirements of federal securities laws when it offers and sells up to $5,000,000 in securities in any 12-month period. A company can use this exemption only if it is not a “blank check” company and does not have to file reports under the Securities Act of 1934. Additionally, the exemption generally prohibits companies from soliciting or advertising their securities to the public, and purchasers receive \u201crestricted securities\u201d (that is, they may not sell the securities without registration or an applicable exemption). Under certain specific circumstances and satisfying additional requirements, Rule 504 may allow companies to sell securities that are not restricted.<\/p>\n\n\n\n

A “blank check” company is a developmental \n\t\t\tstage company issuing penny stock, and has (1.) no specific business \n\t\t\tplan or purpose, or (2) a business plan to merge with an \n\t\t\tunidentified company or companies.<\/p>\n\n\n\n

Rule 506(c) Exemption<\/em><\/strong>, General Solicitation.<\/strong><\/em> A business entity, qualifying for exemption under Rule 506(c) of Regulation D, may broadly solicit and generally advertise an offering, if and only if: <\/p>\n\n\n\n