1. Will the Angel Law Forum forward my business plan to Angels for me?
2. What are the legal requirements for selling the stock of my new company privately to Angel investors? Can my company rely on Regulation D to sell stock to investors?
3. Are there other ways for my business to sell stock to investors without registration? What about California's Limited Public Offering Rule?

1. Will the Angel Law Forum Forward My Business Plan to Angels For Me?

The Angel Law Forum will not forward business plans directly to prospective investors. We will, however, forward business plans or other information about your new business venture to prospective investors, or potential Angels, when they request it.

We do not provide entrepreneurs with information about the Angels, prospective investors, or representatives of Angels and investors who attend our events or who have obtained passwords to browse the Website listings.

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2. What are the legal requirements for selling stock in my new company to private investors?

Accepting an investment from a private investor in exchange for stock in your company is a sale of securities which must be registered with the SEC and registered or qualified with the securities regulators of the state in which the sale takes place, unless the transaction can qualify for one of the exemptions from the federal registration requirements and one of the corresponding state rules exempting the transaction from the state qualification requirements.

Sales of shares of stock or other securities of a closely-held corporation, a start-up or a company in the organizational stage, typically will rely on the so-called "private placement" exemptions under Regulation D under the Securities Act of 1933, including Rule 506 of Regulation D. These exemptions are really "safe harbor" rules for private offerings; they allow issuing companies to follow a specific set of rules to ensure that their securities offering will be exempt from registration requirements under the Securities Act of 1933 and from state securities qualification requirements.

There are several requirements for an offering of securities under Regulation D. Prospective investors must receive information about the issuing company, its current and projected financial condition, and its plans; this is typically provided in the form of a private placement memorandum. The issuing company needs to obtain certain representations from potential investors about their investment intent and their sophistication. The issuing company is limited in the number of subscriptions to acquire securities that it may accept from investors who do not meet the SEC's "accredited investor" standards. (See our Investors' FAQ for more on this.) There are other important federal rules and requirements governing a private placement transaction, and the issuing company must also comply with applicable state rules and procedures (these typically are limited to certain notice filings).

You should consult an attorney for detailed advice on any proposed financing transaction and the compliance with applicable securities laws.

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3. Are There Other Ways For My Business To Sell Stock to Investors Without Registration With the SEC?

California enterprises that sell their securities within the state may qualify for California's limited public offering exemption from the California securities qualification requirements. (There is a corresponding federal exemption.) The investor qualification rules for this kind of offering are slightly more lenient than the federal accredited investor standards. You should consult an attorney for advice on California's securities laws and regulations and for advice on other means of facilitating private financing transactions.

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