How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask BizIPEsq. Your Own Question
BizIPEsq.
BizIPEsq., Attorney
Category: Business Law
Satisfied Customers: 996
Experience:  I am a business attorney. I represent individuals and companies with all business related matters.
73280834
Type Your Business Law Question Here...
BizIPEsq. is online now
A new question is answered every 9 seconds

Complex, Compound question: We have a small OTC public company

This answer was rated:

Complex, Compound question: We have a small OTC public company and are looking to raise Private Equity funds to fuel growth. We are preparing a Private Placement Memo which trades cash for common stock.

The question is: What is the best way to raise finds under a Reg D offering that allows for the the shortest restriction time for the investor to be able to freely trade the stock?

TheLegalistEsq :

Hello, I will be assisting you.

TheLegalistEsq :

I'm not sure I quite understand the question. Are you concerned with any restriction on trading after the sale or are concerned about the time period available to you to raise a certain amount of money?

Customer:

Actually both. But my current question was supposed to be aimed at the first part...the restriction on trading.

TheLegalistEsq :

I'

TheLegalistEsq :

Let me answer the first part and if you still need additional info you can always start a new question and request me.

TheLegalistEsq :

Actually one additional question, how much money are you trying to raise?

Customer:

$10MM. If necessary, we could do 2 separate PPM's if your question revolves around funding limits inside of certain reg d offerings.

TheLegalistEsq :

You are correct. Under Rule 505 of Reg D you are limited to raising 5M in any 12-month period. Generally there are no restrictions on sale. However since you need to raise 10MM you may need to use the exception outlined in Rule 506 and under that rule the equity cannot be freely traded on secondary markets. Also note that if raising money under Rule 505 you would to prepare a financial statement that need to be certified by an independent CPA.

TheLegalistEsq :

I suppose that if you are willing to fund raise over the course of one year then under rule 505 you can do a 5M round now and another 5M round in 12 months with liquidity retained by your investors.

TheLegalistEsq :

Please rate my service. Thank you for using Just Answer..

Customer:

Thanks. XXXXX

BizIPEsq. and other Business Law Specialists are ready to help you