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Private Placement (Reg D)
When selling your company's stock you will use an offering disclosure document to inform investors about the pertinent details about the company and the stock offering. This document is the disclosure document, or as popularly known as the "offering memorandum". While the Direct Public Offering program has no prescribed disclosure requirements, it is always recommended that you utilize an offering memorandum to assure proper disclosure of all pertinent corporate details. This disclosure document also protects the company and company principals because it informs investors of all the needed disclosure items before they invest.
Some typical disclosures include information about: the company's business, company management, market for the company's product or services, use of invested proceeds, stock offering details (share restrictions, voting rights, etc.), details about shares held by management, details about risks investors may face (lack of operating history, product development risks, reliance on a single distributor, etc), recent significant transactions, and other disclosures related to the company's overall condition.
The company's offering memorandum will include a Subscription Agreement which is the "stock sales contract" between the investor and the company. This Subscription Agreement comes included with an Investor Suitability Questionnaire which helps the company determine an investors suitability for investing in the offering.
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