Legal Question in Securities Law in California

I'd want to do some research before giving you an unqualified response, but I will say that "off the top of my head" I know of nothing in Reg. A or any other law that would prevent either an LLC or and "S" corp. from issuing securities thereunder.

I recommend taking a look at a couple of Web sites. First, try

http://www.bizfilings.com/toolkit/sbg/run-a-business/assets/dont-run-afoul-of-securities-laws.aspx

Then, for a scholarly analysis of whether LLC interests are securities, see

http://www.nylslawreview.com/wordpress/wp-content/uploads/2012/04/56-4.Regulation-LLC.Girnys.pdf

Also note that you might want to consider Reg. D offerings........ and very importantly, consider the state laws of states where you might want to peddle the securities. They vary substantially.

Some authorities suggest adopting Sub-S status before doing a small IPO - has to do with ability to make a pre-IPO "distribution" (as opposed to "dividend") just before going public.

Finally, it is very important to recognize that regulation of securities issuance involves both Federal law and the laws and policies of all states into which securities might be sold. The state laws differ substantially. What some states openly allow, others regulate or prohibit.