Legal Question in Securities Law in New York
Our company wants to connect crowd-sourced capital to infrastructure needs. We wanted to sell fractions of an physical infrastructure component to large groups of individuals, sell the products/services of the infrastructure component, and return the profits from selling the products/services to the individuals who own the fractions. We are not selling securities, rather fractional pieces of a physical system. The money the individuals would see comes from selling the products/services that their piece of the system produces. Do the SEC security rules regarding accredited investor apply? Is it as simple as drafting the appropriate contract detailing the relationship between the individual (owner), the buyer, and our company? Thank you
1 Answer from Attorneys
Unfortunately, the scenario you described is too complex to answer yes or no. The basic operating framework is the presumption that a company/offering has to be registered with the SEC unless it is exempt.
Whenever you have an offering of equity to a large number of people over what would likely be mass media and/or the internet, such offering requires careful analysis of the rules and regulations that may apply. So the basic premise is that you would have to register, unless you can find an applicable exemption.
Roman R. Fichman, Esq.
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