Safe Harbor For Seeking Accredited Investors

If you are seeking to raise money for your business through private offering, the US Securities and Exchange Commission  (SEC) recently changed the rules regarding broad solicitation and general advertising under Rule 506 (c). Your company may take reasonable steps to ensure that all purchases are being made by accredited investors to satisfy the SEC rules when such accredited investors have approached the company following the general solicitation. The SEC provides non-exclusive means of achieving a safe harbor under the rule for verifying the income of the accredited investor, which include reviewing Internal Revenue Service forms that report income for the two most recent years.

When this is not available, review of the Internal Revenue Service forms that report income for the two years preceding the recently completed year and obtaining written representations from the purchaser that (i) an Internal Revenue Service form that reports the purchaser’s income for the recently completed year is not available, (ii) specify the amount of income the purchaser received for the recently completed year and that such amount reached the level needed to qualify as an accredited investor, and (iii) the purchaser has a reasonable expectation of reaching the requisite income level for the current year satisfies the SEC rule.

If you are a member of Spiegel & Utrera, P.A.’s General Counsel Club and have business related questions, call (800) 734-9900 or clubassist@amerilawyer.com for assistance. Remember, as a member of the  General Counsel Club, you receive unlimited legal, business, credit and tax advice all year long.

Spiegel & Utrera, P.A. is a corporate law firm with its main offices located in Miami, Florida with offices throughout the United States. As a law firm, we do more than just help you form your business entity. We stand ready to help with the maintenance of your legal business entity! We will assist you with Incorporation Service, Trademarks, Copyrights, Estate Planning, Legal Counsel, Wills,Trusts, Agreements & Leases, Corporate & Company