Legal Question in Business Law in California

I am helping a start-up to raise funding. The CEO is a friend -- she wants to work with me. I will introduce her to someone who wants to fund her company. In return, she (the CEO) is willing to pay me a finder's fee which includes cash and equity (with no vesting). I do not have any licenses (like FINRA) and I am not an accredited investor. How do I write the finder's fee agreement so it is legal? I am willing to make any changes to the terms that are necessary, such as to receive only cash (or only equity), or any other changes needed.


Asked on 2/05/11, 12:20 pm

1 Answer from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

I believe the legality of your proposed activity depends heavily upon the nature of the securities being issued and the availability of an exemption under state and federal securities law. I assume you are not in the business of an investment advisor or broker-dealer. I believe that if the offering qualifies under Corporations Code section 25102(f) for exemption from registration, you are OK acting as a finder and receiving a finders fee from the issuer. All this should be disclosed to the investor. Note that qualifying for a 25102(f) exemption requires that the investor(s) be qualified.

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Answered on 2/08/11, 6:06 pm


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