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 Law Educator, Esq. Your Own Question

Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 88345
Experience:  All corporate law, including non-profits and charitable fraternal organizations.
Type Your Business Law Question Here...
Law Educator, Esq. is online now
A new question is answered every 9 seconds

If you are an affiliate, you must file a notice with the SEC

Resolved Question:

If you are an affiliate, you must file a notice with the SEC on Form 144 if the sale involves more than 5,000 shares or the aggregate dollar amount is greater than $50,000 in any three-month period. The sale must take place within three months of filing the notice and, if the securities have not been sold, you must file an amended notice. Does this apply to start-up that has a few shareholders, and attempt to raise seed money to start the business?
Submitted: 1 year ago.
Category: Business Law
Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your additional question. To add to what you were already told about accredited investors. Shares do not have to be registered for sale if the sale is an intrastate sale of shares.

An intrastate offering is an offering made only to the residents of a state by a corporation in that state. The offering must be registered in the state, and it must comply with SEC Rule 147:

  • the issuer is incorporated in the state;
  • at least 80% of the issuer’s revenues must come from business within the state,
  • at least 80% of the issuer’s assets must be located in the state,
  • at least 80% of the proceeds of the offering must be used in the state;
  • buyers of the offering must be state residents or an entity owned by state residents.

Resale is permitted only:

  • to other state residents;
  • or to other buyers only after 9 months after the termination of the Rule 147 offering;
  • and the certificates and offering document must specify these resale restrictions.

If your sale is complying with these terms you can get away with a 147 offering as well to raise small capital in your local company.

 

Also,

A corporation can raise up to $5,000,000 within a 12-month period from any number of accredited investors, but no more than 35 non-accredited investors.

A non-accredited investor is anyone or organization who is not an accredited investor. However, a married couple counts as 1 non-accredited investor, as well as any purchase of issues under the Uniform Gifts to Minors Act (UGMA) for their dependent children. A partnership that was not formed for a Reg D investment is considered to be 1 non-accredited investor; if the partnership was formed expressly for this investment, then the number of non-accredited investors depends on the status of each partner.

 

Furthermore, a non-reporting company can raise up to $1,000,000 from any number of individuals, accredited or not, without a SEC registration.

 

144 securities are restricted securities which are securities acquired in unregistered, private sales from the issuer or from an affiliate of the issuer. Investors typically receive restricted securities through private placement offerings, Regulation D offerings, employee stock benefit plans, as compensation for professional services, or in exchange for providing start-up capital to the company. Rule 144(a)(3) identifies what sales produce restricted securities. Restricted stock will usually have the restrictive legend, "restricted", on the certificates to serve as notice that their resale is restricted.

 

Control stock is stock owned by a control person (aka insider, affiliate), who is a corporate director or officer, or a stockholder with more than 10% of the voting stock, or the spouses of the aforementioned.

 

Rule 144 places limitations on any resale of restricted securities. Control stock is also restricted; however, control stock certificates usually do not have the restrictive legend. Although these restrictions can be removed by fully registering the security, the time and expense of a full registration is usually prohibitive. However, control persons can sell normally restricted stock without restrictions if sold as part of a registered primary offering by the issuer. No restricted stock can be sold unless the issuer is current in filing all required financial statements to the SEC.

Before restricted stock can be resold:

  1. The seller must have had the fully paid stock for 1 year.
  2. The issuer has complied with the periodic reporting requirements of the Securities Exchange Act of 1934.
  3. If the quantity of the stock exceeds 500 shares or $10,000 in value, then he must also file a Form 144, Notice of Proposed Sale, with the SEC with the details of the sale and compliance with Rule 144. The sale must take place within a 90-day period; otherwise another Form 144 must be filed that will cover another 90 days.
  4. The total value of an exchange-traded stock cannot exceed the greater of 1% of the issuer’s outstanding stock, or the average weekly volume for the preceding 4 weeks. If the stock is only traded over the counter, then the sale cannot exceed 1% of the issuer's outstanding stock.
  5. The stock must be sold as an ordinary brokerage transaction with the regular commission charged. Neither the seller nor the broker can solicit orders to buy the securities.

Exceptions to the 144 requirement include the resale by a member firm in an agency capacity, or if a market maker in the security purchases the issue as a principal for his own account.



Thank you so much for using JustAnswer.com. I truly aim to please you as a customer, but please keep in mind that I do not know what you already know or don't know, or with what you need help, unless you tell me. If I did not answer the question you thought you were asking, please respond with the specific question you wanted answered. PLEASE use REPLY to EXPERT if you would like more information or if you feel something was not included in your answer.

Kindly remember the ONLY WAY experts receive any credit at all for spending time with customers is if you click on OK, GOOD or EXCELLENT SERVICE even though you have made a deposit or are a subscription customer. YOU MUST COMPLETE THE RATING FOR THE EXPERT TO RECEIVE ANY CREDIT, if not the site keeps your money on deposit.

Also remember, sometimes the law does not support what we want it to support, but that is not the fault of the person answering the question, so please be courteous.


Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your wonderful feedback. I am sorry you do not like the SEC rules which were provided to you directly from the SEC. You were asked if you had further questions or wanted additional information and you never responded asking for any. I am sorry again that the SEC rules do not satisfy you. I wish you all the best, XXXXX XXXXX you would like more specific information, since your question was indeed answered, please ask.
Customer: replied 1 year ago.


I just sent you more details.

Expert:  Law Educator, Esq. replied 1 year ago.
I am very sorry, but I never got any details from you. I apologize sincerely, XXXXX XXXXX customer replies and even our expert answers do not post and I have reported it to technical support, but it is out of the control of the experts I am afraid and frustrates us as well.

Please post your reply again because I did not receive it as you can see by looking at everything that has posed above.
Customer: replied 1 year ago.


If we need to raise $1000,000 from accredited and non-accredited investors who are friends and family (not general public), what rules do we have to comply with for the number of none accredited investors to exceed the 35?

Expert:  Law Educator, Esq. replied 1 year ago.
If you seek to raise the $1,000,000 from non-accredited investors or $5,000,000 from both accredited and non-accredited (not to exceed 35). These investments are under Regulation A:

Regulation A of the Securities Act of 1933 (aka Reg A) exempts small offerings of securities from the regular SEC registration if these conditions are met:

  • The public offering is not for more than $5,000,000 within a 12-month period.
  • The offering statement, which is a simplified disclosure document, must be filed with a Regional Office of the SEC at least 10 days before the issue is offered for sale.
  • The offering circular, which is similar to the prospectus in providing full disclosure, must be sent to each buyer of the issue at least 48 hours before the confirmation of the sale.
  • The offering circular must be revised if the issue is still being offered 9 months after the initial issue, and the issuer must file a sales report of the issue with the Securities and Exchange Commission (SEC) every 6 months until the offer is terminated.
Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 88345
Experience: All corporate law, including non-profits and charitable fraternal organizations.
Law Educator, Esq. and 4 other Business Law Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
< Last | Next >
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
  • My Expert was fast and seemed to have the answer to my taser question at the tips of her fingers. Communication was excellent. I left feeling confident in her answer. Eric Redwood City, CA
  • I am very pleased with JustAnswer as a place to go for divorce or criminal law knowledge and insight. Michael Wichita, KS
  • PaulMJD helped me with questions I had regarding an urgent legal matter. His answers were excellent. Three H. Houston, TX
  • Anne was extremely helpful. Her information put me in the right direction for action that kept me legal, possible saving me a ton of money in the future. Thank you again, Anne!! Elaine Atlanta, GA
  • It worked great. I had the facts and I presented them to my ex-landlord and she folded and returned my deposit. The 50 bucks I spent with you solved my problem. Tony Apopka, FL
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
 
 
 

Meet The Experts:

 
 
 
  • Law Pro

    Attorney

    Satisfied Customers:

    1426
    20 years experience in business law - sole proprietor, partnership, and corporations
< Last | Next >
  • http://ww2.justanswer.com/uploads/LA/lawpro/2012-6-25_171315_PT206740s.64x64.jpg Law Pro's Avatar

    Law Pro

    Attorney

    Satisfied Customers:

    1426
    20 years experience in business law - sole proprietor, partnership, and corporations
  • http://ww2.justanswer.com/uploads/DC/DCraneEsq/2012-8-14_14436_DCrane.64x64.jpg MShore Law's Avatar

    MShore Law

    Attorney

    Satisfied Customers:

    1233
    Drafted Negotiated and/or Reviewed Thousands of Commercial Agreements
  • http://ww2.justanswer.com/uploads/FL/FLAandNYLawyer/2012-1-27_14349_3Fotolia25855429M.64x64.jpg FiveStarLaw's Avatar

    FiveStarLaw

    Attorney

    Satisfied Customers:

    1162
    25 years of experience helping people like you.
  • http://ww2.justanswer.com/uploads/dkaplun/2009-05-17_173121_headshot_1_2.jpg Dimitry K., Esq.'s Avatar

    Dimitry K., Esq.

    Attorney

    Satisfied Customers:

    1142
    Run my own successful business/contract law practice.
  • http://ww2.justanswer.com/uploads/ohioatty/2009-1-22_185545_me.jpg J.Hazelbaker's Avatar

    J.Hazelbaker

    Attorney

    Satisfied Customers:

    393
    Experienced and trained in the area of business law.
  • http://ww2.justanswer.com/uploads/scottymacesq/2009-6-10_221523_small.jpg RGMacEsq's Avatar

    RGMacEsq

    Attorney

    Satisfied Customers:

    393
    Licensed Texas General Practice Attorney
  • http://ww2.justanswer.com/uploads/BA/barristerinky/2012-6-10_22423_office.64x64.jpg Barrister's Avatar

    Barrister

    Attorney

    Satisfied Customers:

    301
    13 years practicing attorney, MBA