SECURITIES OFFERINGS2020-12-06T03:05:18+00:00


Sometimes, raising funds from passive investors is necessary to get your business off the ground. At Shah Grossi Law & Counsel, we understand the benefits and burdens of raising capital, be it equity or debt offerings. We advise companies and entrepreneurs on raising money through Regulation D private placement offerings and other avenues involving exemptions from full-blown registration statements. Rule 506 of Regulation D is the most commonly used method and is considered a “safe harbor” for the private offering exemption of Section 4(a)(2) of the Securities Act. Companies relying on the Rule 506 exemption can raise an unlimited amount of money. Navigating the complex and rapidly evolving securities laws and SEC regulations is no easy task, and compliance deficiencies can be devastating (including criminal liability). We have experience preparing private placement securities offerings through a variety of Regulation D “safe harbor” offering structures, including corporate stock issuances and offering membership interests in LLCs.

We assist our clients in properly structuring their offerings, choosing the applicable exemption(s) from registration, preparing offering terms and documents (including executive summaries, private placement memorandums, investor qualification questionnaires, and subscription agreements), filing the federal Form D, complying with applicable state “blue sky” laws, and providing sound guidance on how to lawfully conduct the securities offering. We have the experience and capability to serve clients across diverse industries, including real estate, technology startups, music/entertainment, restaurants, fitness/wellness, and manufacturing.

When it comes to offering a piece of your company’s equity (or issuing debt instruments such as promissory notes or debentures), choosing your investors wisely is paramount. We generally advise that only “accredited investors” should be permitted to invest because offerors must give non-accredited investors disclosure documents and information that are generally the same as those used in registered offerings, which is comprehensive and cost-prohibitive. We are committed to help our clients undertake reasonable steps to verify their prospective investors are, indeed, accredited, including the review of financial statements, W-2s, tax returns, bank and brokerage statements, credit reports, etc. Ideally, all investors should be wealthy, sophisticated, and have a pre-existing substantive relationship with the principal of the company. If you plan to offer securities to those you don’t already know or to any non-accredited investors, obtaining the advice of experienced securities counsel is critical before you proceed.

At Shah Grossi Law & Counsel, we have the legal know-how and ability to synthesize, distill, and elucidate the relevant risk factors and material issues to disclose in your securities offering documents. These are unique to each deal and, to minimize potential liability, should not simply be stated in boilerplate terms (as others often do). Offerors must provide all information that prospective investors might reasonably require to make an informed and intelligent investment decision. Providing anything less than that is playing with fire.

Investors must be provided with all material facts and information which affords them the ability to appreciate all the risks before they invest. The exclusion or omission of such information, as well as the provision of false or misleading facts, must be avoided at all costs. A “pitch deck” or brief overview/summary of the business and offering terms should never be treated as the offering documents themselves. Rather, those are starting points and should generally be used to determine whether any interest even exists in learning more about the venture and offering.

Although it may seem like unnecessary paperwork, engaging in pre-sale due diligence of investors and making all relevant and material disclosures through comprehensive offering documents can mean the difference between a compliant versus non-compliant private placement securities offering. And being out of compliance can result in investor rescission rights, civil lawsuits, and even criminal penalties such as fines and imprisonment. We are here to help you raise money with confidence so you can drive your business to success.


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