What is worth knowing before you start

Five questions to settle with counsel first

Rule 506(b) or Rule 506(c)?

Rule 506(b) may not be generally solicited: access is by invitation, and the company should be able to show how it knew each person before the offer. Rule 506(c) permits general solicitation, but every purchaser must be accredited and the company must take reasonable steps to verify it. The answer usually follows from how you intend to find investors.

Testing the waters without making an offer

Sprowtt supports it. Under Regulation A, a federal exemption, you may ask whether anyone would be interested before the offering statement is qualified (Rule 255). No money may be solicited or accepted, no commitment of any kind may be sought, and an indication of interest is not a commitment of any kind. Words like “invest now”, “reserve your shares” or “your commitment” turn an indication into something else. Stating the price or the amount you are testing is allowed.

Rule 147A and residency

Offers may be seen outside the state; sales may be made only to residents of the company's state. A written statement of residency from the purchaser is not enough on its own. The offering also relies on the state's own exemption — in Florida, section 517.0611 (Limited Offering) or section 517.0612 (Invest Local). For a Florida Limited Offering (s. 517.0611), the company files Form FLO with the OFR, with a $200 fee, at least 10 days before the offering starts or is shown on an intermediary's website; a Limited Offering of $2.5 million or more must use a registered dealer or intermediary. For Invest Local (s. 517.0612), the company files Form OFR-FILE at least 5 business days before the offering starts; no intermediary is required.

Do we need an escrow agent?

For a Rule 506 offering, usually not. Where one is wanted, the company chooses a bank or escrow agent, contracts with it directly and pays its stated price directly. Each escrow provider sets its own price per offering.

The closing binder

One dated file of the deal-room sections, the documents, the investor register and the timestamps. Assembling it at the close is far cheaper than rebuilding it later.

Insights

The notice belongs on your page, not ours

Most platforms put your offering in their catalog, because the catalog is their asset. We render the card and your own website displays it.

Why a 506(b) card will not paste onto a homepage

Rule 506(b) has no general solicitation. So the embed refuses to render a 506(b) card publicly, whatever is in the page.

Software, not a portal — and why we keep saying it

Three products, three licences, one family. The wording exists so a securities lawyer never has to guess which one they are in.

Federal and state resources

Also here

• Insights — short pieces on how this software is built and why
• The FAQ, which answers the commercial questions rather than the legal ones
• Florida Formation Weekend, for founders who would rather be walked through it in two days