Private Investments and Securities
The complex and evolving legal landscape governing financial investments is the main area of concentration for Houston business attorneys. Working with one of the Houston Securities Lawyer at Titus Law Firm will enable you to manage your money more effectively and to recover any losses brought on by carelessness.
Do you currently own a business or are you considering doing so? Things can go horribly wrong if you don’t have a Houston business attorney fighting for your rights in a crucial business situation. Your investing troubles might be resolved by a Houston business attorney.
Why You Need a Houston Securities Lawyer
Ask us About Safe Harbor Investments
Businesses employ this strategy to prevent takeovers. In order to avoid a hostile takeover, a firm will deliberately buy a company with strict standards. As a result, the firm appears less desirable to the other company interested in acquiring it. If you’re interested in this, feel free to bring it up in your free case evaluation.
General Partnerships or Limited Partnerships—Which is Right for You?
When two or more partners join together to launch a firm, they create a general partnership; it is the most fundamental and straightforward sort of partnership. Each individual is referred to as a general partner in a company with two or more persons operating in collaboration for profit.
Although a general partnership is not required by Texas law to have a partnership agreement, it is often a good idea to have one. Prospective company partners should draft a formal partnership agreement outlining their respective roles, ownership stakes, and operational procedures for the collaboration. A Houston Securities Lawyer at Titus Law Firm can help draft a partnership agreement to avoid confusion between partners.
Limited partnerships must submit a limited partnership certificate to the Texas Secretary of State in order to insulate its limited partners from the obligations and liabilities of the corporate entity.
A formal partnership agreement that specifies the general and limited partners, as well as their respective obligations and rights, is a good idea since a limited partnership enables the partners to transfer earnings and losses directly via the corporation to the partners. The Titus Law Firm can help at all stages, with all concerns.
Your Houston, Texas Private Equity Firm
The Titus Law Firm has a wealth of expertise representing real estate and private equity businesses in complicated transactions in a range of sectors, whether you’re working on small, mid-market, or huge deals.
A key element of creating a private equity fund is adhering to Securities and Exchange Commission (SEC) and state requirements. The Houston securities lawyers at The Titus Law Firm are qualified to represent venture capital and private equity clients with regard to all facets of their company and investments.
Federal Exemptions
An offer or sale of a security is subject to federal securities laws. It must either be registered with the U.S. Securities and Exchange Commission (SEC) or qualify for an exemption.
Some corporations can issue and sell their securities without registering the offering with the SEC, thanks to the exemptions provided by Regulation D under the Securities Act.
Rule 504
Any company seeking to raise capital from investors must either meet the exemption requirements or register the securities with the SEC and the relevant state securities board(s).
The SEC changed Regulation D by repealing Rule 505 and amending Rule 504 in 2017. Under Rule 504, the previous cap on businesses raising money was increased from $1 million to $10 million. Additionally, there is no restriction on the number of investors, and investors do not have to be accredited. There is also no need for disclosure. The company may advertise under certain conditions.
The SEC must receive a notice on Form D, and “bad actors” are not eligible for the exemption.
Rule 506(b)
When corporations issue and sell securities, Rule 506 of Regulation D allows two special exemptions from registration. Companies that depend on Rule 506 exemptions are permitted to raise unlimited money.
A corporation can be sure it falls within the exemption under Rule 506(b)—a “safe harbor” under the Securities Act—by meeting a couple of requirements, including:
The number of “accredited investors” to which the corporation may sell stocks is unlimited, while the maximum number of additional buyers is 35.
All non-accredited investors must be “sophisticated,” which means they must have the knowledge and expertise in financial and commercial topics to weigh the benefits and dangers of a potential investment.
The business is not permitted to market the securities by general solicitation or advertising.
Speak to a qualified Houston securities lawyer at Titus Law Firm for additional requirements.
Rule 506(c)
Rule 506(c) allows issuers to widely seek and widely publicize an offering as long as the issuer takes reasonable measures to confirm that all buyers in the offering are accredited investors and specific additional requirements in Regulation D are met.
Companies that adhere to Rule 506(b) or (c) need not register their offering of securities with the SEC, but they must submit an electronic form known as Form D to the SEC following their initial sale of shares.
Regulation Crowdfunding
A private company may raise money from the public through Regulation Crowdfunding, an exemption from securities laws.
Crowdfunding is a method that enables small businesses and startups to raise money from numerous people who might not otherwise be considered “accredited investors.”
A Regulation Crowdfunding offering is open to everyone. Nonetheless, you are restricted in how much you may invest in these transactions for any 12-month period due to the dangers of this type of investment. Your annual income and net worth will determine the maximum amount you are permitted to invest.
Regulation A
There are two distinct tiers under Regulation A. In 2015, Regulation A was revised to enable businesses to generate income under two categories corresponding to two sorts of investments.
Under Tier 1, an issuer may raise up to $20 million in 12 months. Tier 2 allows issuers to raise $75 million in a single 12-month period.
Companies in Tier 1 are exempt from ongoing reporting obligations but are still required to submit a report on the outcome of the offering. Companies in Tier 2 are obliged to submit ongoing reports that include the company’s final status and audited financial statements.
Tier 1 and Tier 2 offerings must meet fundamental criteria, such as corporate eligibility, rules for disqualifying bad actors, and disclosure.
Contact one of our Houston securities attorneys for more information on requirements.
The Titus Law Firm is familiar with all manner of Reg D and Reg A offerings as well as 1940 Act exemptions. Allow us to structure and form your next fund or syndication.
