Mina Mar Group

Simply put general solicitation is an act of marketing capital raise publicly, but things are mot that simple. General solicitation is not precisely defined in statues and rules so Securities and Exchange Commission (SEC) takes case by case approach in case of violation "no general solicitation' requirement of Rule 506(b). It all started with JOBS Act in 2012, with purpose to make securities regulations friendlier form small businesses. General solicitation was banned since 1933 and Securities Act of 1933 in order to protect investors from scams and frauds. The Jobs Act required from SEC to amend existing and create new exemptions that will permit issuers of securities to raise capital without SEC registration. On July 19, 2013 SEC adopted amendments to Rule 506 of Regulation D. Another Rule of the same regulation, 506(b) provided issuer with conditions to rely on in order to met requirements of Section 4(a)(2) of Securities Act that exempts from registration "tr...

Restricted stock or restricted securities is unregistered stock that is not fully transferable until certain conditions are met and they must be traded in compliance with SEC regulations. After the conditions are met stock is no longer restricted and it becomes transferable.  Restricted stocks are often given to employees as a compensation that typically become transferable after certain conditions are met like continued employment for a period of time before vesting or achievement in particular product-development milestones, earning per share goals or other financial targets. Restricted stock is also given to corporate insiders like directors and executives, often after merger and acquisition, underwriting and affiliate ownership  to prevent early selling of stock that could negatively affect the company. Corporate affiliates can also lose the right on stock if they leave the company, fail to meet certain performance goals or break SEC trading restriction rules. Con...

Private placement memorandum also known as offering memorandum is the most important document for any private company that is raising capital. Such sale of stock, bonds or other securities directly to selected private investors is called private placement. Unlike company that is raising capital via traditional IPO and becomes publicly traded, company that utilizes private placement remains private. Private placement memorandum can be compared to prospectus in public offerings and its purpose is to provide prospective buyers with needed information. Offering memorandum gives in depth look at business and its operations explaining nature of business, terms of investments, potential risks and management among other things. Sometime it can be compared to thorough business plan but there is a difference. Business plan often has marketing purpose created to promote the company and attract investors. On the other side private placement memorandum is more factual and descriptive in t...

Direct public offering also known as direct listing or direct placement is a type of offering where company offers securities directly to public in order to raise capital. It is considered alternative to initial public offering but unlike in IPO company that uses direct listing eliminates intermediaries like investment banks that underwrite stock, making stock price dependent on the market. In direct listing employees and early investors convert their ownership into stock that is then offered to the public meaning that no new shares are issued which stops stock dilution. Because in DPO middle man in form of investment banks, broker-dealers and underwriters is eliminated it enables issuer to sell shares quickly, without the lockout period. It also makes the offering cheaper because there is no underwriting fees to pay and faster because there is fewer thing to manage than in traditional IPO. Underwriters  not only set the IPO price but they also organize roadshows, fil...

Special purpose vehicle/entity (SPV/SPE) is separate legal entity created by an  organization for specific, often narrow and temporary purpose, typically to isolate company from financial risk, including bankruptcy.It can be understood as subsidiary of larger company but it has its own assets and liabilities. There are several uses of special purpose vehicles. Because every project carries certain amount of risk parent company will use SPV to shield itself from risk in a legal way. This way companies can execute large financial projects without putting the whole firm at risk. Securitization of loan is another common usage of SPVs. It is used when banks that issue mortgage-backed securities whose payment comes from pool of loans. In order to ensure that investors in mortgage-back securities are payed first bank will establish SPV, separating it from other obligations and giving it a priority in payment. Management of assets with exceptionally complex financial ...

On July 10, 2013 the Securities and Exchange Commission adopted bad actor disqualification provision for Rule 506 of Regulation D under Securities Act of 1933, to implement Section 926 of Dodd-Frank Wall Street Reform and Consumer Protection Act. The disqualification and related disclosure provision appear as paragraphs (d) and (e) of Rule 506, of Regulation D. The Bad Actor rule prohibits company (the issuer) to use registration exemption if the issuer or any other associated person has been convicted of or subjected to judicial or regulatory sanctions for certain violation of U.S law. Exemption from registration under Regulation D helps thousand of businesses to raise capital worth billions of dollars. T he “Bad Actor” rule is codified as new paragraphs (d) and (e) to Rule 506.  Rule 506(d) provides that the exemptions in Rule 506(b) and Rule 506(c) are not available if the issuer or any associated person is statutorily disqualified. This includes all of the following: ...

In February 2019 Securities and Exchange Commission voted to propose a new Securities Act Rule 163B that would permit any issuer to engage in oral or written communication with potential investors that are, or are reasonably believed to be, qualified institutional buyers and institutional accredited investors either prior or following the filing of registration statement. This means the expansion of the JOBS act, which created Section 5(d) of Securities Act that permits only emerging growth companies to engage in communication with investors prior or following the filing the registration statement of the offering. Companies that have more than $1 billion in annual revenues cannot qualify as emerging growth companies and use the benefit of "test-the-waters" provision. The new rule will extend it beyond EGC to all issuers, including investment company issuers. The proposal from the SEC follows action taken by The Division of Corporate Finance in July 2017 to allow all ...