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Can I offer equity to investors without violating securities laws in Florida? What are the requirements?

To offer equity to investors in Florida, you must comply with the state’s securities laws. The Florida Securities and Investor Protection Act provides two relevant sections that address this issue: Florida Equity Exchange Feasibility Study; Structure, Operation, and Regulation [1.1] and Intrastate Crowdfunding [3.1].

Florida Equity Exchange Feasibility Study; Structure, Operation, and Regulation [1.1]

This section allows for the creation of one or more Florida equity exchanges, subject to approval by the Office of Financial Regulation of the Financial Services Commission. The purpose of the exchange is to provide a marketplace for the negotiation, arrangement, exchange, sale, purchase, brokerage, syndication, and underwriting, and all activities incidental thereto, of investment opportunities, in an institutionalized and, to the maximum extent possible, self-regulated fashion.

To create an exchange, a feasibility study must be conducted to evaluate the possible structure, operation, and regulation of the exchange. The constitution and bylaws of the exchange must be approved by the Office of Financial Regulation, and the exchange must comply with Florida securities laws and rules.

Intrastate Crowdfunding [3.1]

This section provides an exemption from registration for certain intrastate crowdfunding offerings. To qualify for the exemption, the issuer must be a for-profit business entity formed under the laws of Florida, registered with the Secretary of State, maintain its principal place of business in Florida, and derive its revenues primarily from operations in Florida. The offer or sale of securities must be conducted in accordance with the requirements of the federal exemption for intrastate offerings in s. 3(a)(11) of the Securities Act of 1933 and United States Securities and Exchange Commission Rule 147.

The issuer must conduct transactions for the offering through a dealer registered with the office or an intermediary registered under s. 517.12(20). The issuer must also execute an escrow agreement with a federally insured financial institution authorized to do business in Florida for the deposit of investor funds, and ensure that all offering proceeds are provided to the issuer only when the aggregate capital raised from all investors is equal to or greater than the target offering amount.

The issuer must file a notice of the offering with the office, in writing or in electronic form, in a format prescribed by commission rule, together with a nonrefundable filing fee of $200. The notice must contain certain information about the issuer and the offering, and must be filed with the office at least 10 days before the issuer commences an offering of securities or the offering is displayed on a website of an intermediary in reliance upon the exemption provided by this section.

Conclusion

To offer equity to investors in Florida, you must comply with the state’s securities laws. Depending on the specifics of your offering, either the Florida Equity Exchange Feasibility Study; Structure, Operation, and Regulation [1.1] or Intrastate Crowdfunding [3.1] may be applicable. Please consult with a qualified attorney to ensure compliance with all relevant laws and regulations.

Source(s):
Jurisdiction

Florida