Title Four – CrowdFunding Update

Title Four – CrowdFunding Update

Title 4 of the Jobs Act by, Sutter Law – San Francisco Business Law Firm Despite the recent floundering of Title 3 of the JOBS Act before the Securities and Exchange Commission, it appears that Title 4 may actually come to fruition in the near future.  So what does this mean for San Francisco startups? Our Business Law Firm strives to take complex legal terms and break them down into understandable readable blog post. If you like this post please repost it and help us add transparency to the legal profession. Background  The JOBS Act has been around for a few years now.  It was enacted by President Obama in April 2012 in an effort to encourage job and capital creation by reducing the regulatory hurdles for small, growing companies.  But Title 3 and 4 required implementation by the Securities and Exchange Commission through rulemaking, which can often be a protracted grind.  Originally, Title 4 had 90 days following passage of the Act to be implemented.  Now in 2015, it looks more than ever like our patience may pay off. Title 4 is also commonly referred to as Regulation A+, which is a slight jab at the provision it is seeking to amend, Regulation A.  Reg A was an exemption that issuers could use to avoid registration of their securities sales and offers, as required under Section 3 of the Securities Exchange Act of 1933. Reg A allowed unregistered public offerings up to $5 million in a 12-month period. But there was a problem.  Reg A was a Trojan Horse.  Contained within it was a burdensome Blue Sky Law provision...
Investors Due Diligence

Investors Due Diligence

Investors Due Diligence By: Eric H. Milliken, San Francisco Business Attorney Business is going well, it’s going really well. Your clever idea is building into a workable business model. Now that you have proven yourself with actual revenue, you have the attention of investors. After wining and dining, an investor gives you an offer and a list of requirements long enough to make the average person’s head spin. An investor is going to do their due diligence. They are not going to give you a check without making sure YOU and your Company are a good investment. An investor is going to want to see your financials, proof of corporate compliance, and corporate structure. This can be quite daunting for a larger established corporation; however, if you are just starting out, things may be simple. Here is a list of some of the due diligence an investor may want to see: Corporate documentation of good standing from the state you incorporated in Proof of license to do business in every state in which you have risk exposure Copies of any commercial leases or mortgages Company’s articles or certificate of incorporation Bylaws or operating agreement Any equity holders’ agreements Voting agreements Voting trust agreements Joint venture agreements Registration rights agreements Agreements or documents relating to the organization Management structural chart Intellectual Property Rights (IE that the company owns the IP) Any other debts or obligations that would affect the company’s value These are just a few of the corporate documents that investors will want to see before handing over a check. So many start-ups think they can ignore their quarterly...