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Can I offer equity to investors without violating securities laws in Delaware? What are the requirements?
To offer equity to investors in Delaware, you must comply with the state’s securities laws. The requirements for offering equity securities in Delaware are outlined in Title 6 of the Delaware Code.
Registration of Securities
Under Delaware law, equity securities must be registered unless an exemption applies. The registration process involves filing a registration statement with the Delaware Secretary of State and providing certain information about the issuer and the securities being offered.
Exemptions from Registration
There are several exemptions from registration that may apply to an equity offering in Delaware. One exemption is for securities that are registered or required to be registered under the Securities Exchange Act of 1934 [15 U.S.C. § 78l]. Another exemption is for offerings that are limited to no more than 100 investors. Additionally, federal covered securities are exempt from registration in Delaware [2.1].
Unlawful Sale of Securities
It is important to note that under Delaware law, it is unlawful for a beneficial owner, director, or officer to sell any equity security of an insurer if the person selling the security does not own the security sold or does not deliver it against such sale within 20 days thereafter [1.3].
Conclusion
To offer equity to investors in Delaware, you must comply with the state’s securities laws. This may involve registering the securities or relying on an exemption from registration. It is recommended that you consult with a securities attorney to ensure compliance with all applicable laws and regulations.
Source(s):
- [1.1] “Equity security” defined.
- [2.1] Federal covered securities.
- [1.3] Unlawful sale of securities.
Jurisdiction
Delaware