Regulation D Securities Law Call 801-456-3620
Flat-Fee PPM Preparation and Review Services
We are a corporate and securities law firm providing flat-fee private placement memoranda (PPM) preparation services. Our securities attorney began his legal career with one of the nation's largest and most prestigious law firms, where he assisted high profile clients in raising capital through Regulation D private placements in some of the world’s largest markets. The Lore Law office provides Reg D private placement legal services of the highest quality at cost-effective and predictable flat fees. We serve clients across the country from our Salt Lake City and New York City offices.
Experienced Securities Attorney
An experienced securities attorney will work directly with your company through one-on-one consulting at each stage of the private offering process and will be available to answer any questions that arise. Before preparing the offering documents, the attorney will review your company’s existing organizational documents and legal agreements and will assist you in identifying legal issues specific to your organization and offering structure. A private placement securities offering entails significant financial and penal risk, and requires the services of a licensed, experienced attorney to advise you on issues unique to your offering structure and to help you navigate the rapidly evolving securities laws and SEC regulations.
Our Private Offering Structuring and Preparation Process
Our flat-fee engagement includes comprehensive offering structuring and private placement document preparation. The private placement process is broken down into the following five phases, which can typically completed within three to six weeks, depending on your organization’s ability to respond to the attorney’s information and document requests.
1. Review of Organizational Documents and Agreements
Before preparing the offering documents, the attorney will briefly review the company’s existing organizational documents and certain legal agreements to determine whether the offering is authorized by the existing legal agreements. We often find that loan documents, articles, bylaws, LLC agreements, etc., must be amended to facilitate the contemplated securities offering. Among the documents that we would review include the following:
• articles, bylaws, LLC agreements, operating agreement, etc. (to ensure that the offering is authorized by the offering documents and whether the offering documents need to be amended);
• agreements with third parties in which the company is a party, (including customer and supply agreements, leases, employment, management or benefits agreements, option plans, profits interest agreements, member, shareholder or partner agreements);
• offering documents from of any prior public or private debt or equities securities offerings made by the company; and
• non-security debt agreements.
2. Preparation of Company Resolutions
Prior to making a securities offering, the company must prepare documents to authorize the offering and adopt the private placement offering documents. This is done through a resolution or written consent. Depending on the structure of your entity and the terms of the organizational documents, the authorization may be needed from: members, shareholders, managers, directors, or officers. After reviewing the organizational documents, we will prepare the necessary consents authorizing the issuance of the securities.
3. Information Request Phase
The attorney will ask your organization to respond to a detailed Information Request Memorandum that the attorney will prepare based on the initial document review. The request will ask for written summaries of certain company information (much of which would be contained in a detailed business plan) as well as additional documents and records. The memorandum will include items such as the following:
• available financial statements;
• management bios, organizational chart, compensation structure;
• operating history, capital structure, outstanding debt;
• competitive strengths, position in the marketplace, advertising and distribution channels;
• anticipated capital expenditures, anticipated short and long term growth, dividend policies;
• risks particular to your company, pending or threatened litigation;
• regulatory investigations or incitements against your company or management.
4. Structuring the Offering
In the third phase, the attorney will consult with your company on the offering structure and key terms of the offering. With your input, the attorney will prepare a term sheet outlining the principal terms of the offering transaction, including:
• The Regulation D exemption relied upon;
• the number of total authorized shares;
• the class of shares or interest offered (preferred, participating, liquidation preferences, etc.);
• investor rights, including conversion and transferability rights;
• the minimum investment amount per investor;
• the minimum overall offering amount; and
• the price of the shares or promissory notes.
5. Offering Document Preparation
Once your company has responded to the requested information and has signed off on the term sheet, the attorney will prepare the offering documents. The offering documents include three documents: (i) a, private placement memorandum (PPM), sometimes referred to as a private offering memorandum; (ii) a subscription agreement; (iii) an investor suitability questionnaire; and for debt offerings only, a promissory note. During the document preparation phase, the attorney will work closely with you to obtain the necessary information to develop the appropriate disclosures. During this phase, it is important that your company be responsive to the attorney's requests for additional information to avoid delays.
• PPM
The Lore Law Office prepares each PPM according to “SEC Form 1A” the SEC’s highest disclosure format. In order to satisfy the regulatory requirements and provide liability, we draft disclosures and risk factors unique to your company, your industry, and your specific offering terms. Offering securities with a non-attorney drafted PPM or using one-size-fits all template adaptation poses serious regulatory and litigation risk.
• Subscription Agreement
The subscription agreement is the purchase agreement executed by the investor and returned to your organization.
• Investor Suitability Questionnaire
The Investor Suitability Questionnaire (which is attached to the subscription agreement) establishes that the investor meets the required sophistication and accreditation status required by the Regulation D offering. The Questionnaire provides full disclosure to the company regarding the investor’s financial status, and that a loss of their investment will not jeopardize their financial security.
• Promissory Note (Debt only)
For a debt offering, your organization will also need a promissory note, setting forth the terms of the loan between your organization and the investor. There is an additional fee for the preparation of promissory notes.
SEC Form D and State Law Filings
Once the offering documents are prepared, you must comply with the federal and state notice filing requirements, the SEC Form D and state law securities filings, known as "blue sky" filings. It is preferable for a securities attorney to prepare the federal and state filings, as there are adverse consequences for improper filings. However, with a proper understanding of the federal and state filing requirements, this is a process that clients may decide to perform without our assistance.
• SEC Form D
Form D is a federal notice of an exempt securities offering and is the only filing document that is required to be filed with the SEC. This 11 page disclosure details information about the offering, the company, use of proceeds, and the principals of the company. Form D is not subject to a review or approval by the SEC, but is a required notification document, and must be filed with 15 days of the first sale to investors and if the offering is ongoing, Form D must be filed again in one year. We offer preparation of the SEC Form D and provide instructions to help you file the Form D with the SEC.
• State Law Filings
States’ authority to review Regulation D exempt securities laws is restricted. However, states have notice-filing requirements that must be complied with when offering securities to a resident its state. The filing content requirements, as well as the timing required for making the filing differ from state to state, with some states allowing the filing to be made after a resident of the state makes an investment and other states requiring that filing be made prior to any investment. The safest route is to make the state notice filing before doing any marketing in a given state. We offer full state law disclosure preparation and filing services on a state by state basis.
TO LEARN MORE ABOUT THE PRIVATE PLACEMENT OFFERING PROCESS, PLEASE CALL FOR A FREE CONSULTATION 801-456-3620