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: 116715
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

A new startup company wants to raise seed money from friends

This answer was rated:

A new startup company wants to raise seed money from friends and family through issuing control shares...what State and Federal regulations do we have to comply with? Is there a way to ask for a waiver?

Thank you for your question. I look forward to working with you to provide you the information you are seeking.

If shares will be sold to anyone or given to anyone other than a member/owner of the company, then the company must register with the SEC to sell shares and must have a company prospectus with company financial information. A company can only sell unregistered shares to "qualified investors" who are investors with about $1Million in assets and deemed to be experienced in investing. The SEC does not grant waiver of these rules on registration to sell shares to the public I am afraid as they want them secured and controlled. See: Accredited Investors.

There are restricted stock offerings to inside members of the company under Rule 144. Also, a company can raise up to $1,000,000 in capital with unregistered sales or up to $5,000,000 with no more than 35 non-accredited investors.

Thank you so much for using 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.

Law Educator, Esq. and other Business Law Specialists are ready to help you

Related Business Law Questions