Ask Reggi Your Question Now

Reggi is the free generative AI assistance for regulatory compliance
Ask a Question

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

Requirements for Offering Equity to Investors in Utah

Based on the context documents, offering equity to investors in Utah is subject to securities laws. To offer equity to investors without violating securities laws in Utah, the following requirements must be met:

  1. Compliance with Licensing Requirements: It is unlawful for a person to transact business in Utah as a broker-dealer, agent, investment adviser, or investment adviser representative unless the person is licensed under Utah Code Title 61, Chapter 1, Part 3 [2.2]. Therefore, any person or entity offering equity to investors in Utah must comply with the licensing requirements under Utah law.
  2. Compliance with Investment Requirements: The Utah fund of funds is required to invest funds principally in high-quality venture capital funds managed by investment managers who have made a commitment to equity investments in businesses located within the state and have committed to maintain a physical presence within the state [1.1][1.2]. Therefore, any person or entity offering equity to investors in Utah must comply with the investment requirements under Utah law.
  3. Compliance with Authorized Securities Requirements: The articles of incorporation of a stock corporation may authorize the kind of shares permitted by Utah law, and stock rights and options, except that nonvoting common stock may not be issued, all classes of common stock shall have equal voting rights, all common stock shall have a stated par value, and the corporation may issue no shares and no other securities convertible into shares except a single class of common stock for two years after the initial issuance of a certificate of authority, except with the commissioner’s approval [4.1]. Therefore, any person or entity offering equity to investors in Utah must comply with the authorized securities requirements under Utah law.
  4. Compliance with Preemptive Rights: A shareholder’s preemptive rights is governed by Utah Code Section 16-10a-630 [4.1]. Therefore, any person or entity offering equity to investors in Utah must comply with the preemptive rights requirements under Utah law.

Conclusion

To offer equity to investors in Utah without violating securities laws, the person or entity offering equity must comply with the licensing, investment, authorized securities, and preemptive rights requirements under Utah law.

Additionally, Utah has a Securities Investor Education, Training, and Enforcement Fund that provides revenue for the purposes of securities investor education, training, and enforcement [2.1]. Utah also has a Utah Capital Investment Restricted Account that is funded by disbursements from the Utah fund of funds or the corporation [1.3].

Please note that this response is based on the information provided in the context documents and may not be exhaustive. It is recommended that you consult with a legal professional for specific legal advice.

Source(s):
Jurisdiction

Utah