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

Requirements for Offering Equity to Investors in Washington

To offer equity to investors without violating securities laws in Washington, you must comply with the requirements set forth in RCW 21.20.880 [1.2]. These requirements include:

  • Filing the offering with the director and obtaining an exemption declaration [1.2]
  • Conducting the offering in accordance with an applicable exemption from registration under the Securities Act of 1933 [1.2]
  • Being an entity doing business in the state of Washington [1.2]
  • Filing an escrow agreement with the director that provides for the release of offering proceeds to the issuer only when the aggregate capital raised from all investors equals or exceeds the minimum target offering, as determined by the director [1.2]
  • Ensuring that the aggregate purchase price of all securities sold by an issuer pursuant to the exemption provided by this section does not exceed one million dollars during any twelve-month period [1.2]
  • Obtaining an acknowledgement from the investor that they are investing in a high-risk, speculative business venture, that they may lose all of their investment, and that they can afford the loss of their investment [1.2]
  • Reasonably believing that all purchasers are purchasing for investment and not for sale in connection with a distribution of the security [1.2]
  • Providing any other information reasonably requested by the director [1.2]

It is important to note that securities issued under this exemption may not be transferred by the purchaser during a one-year period beginning on the date of purchase, unless certain conditions are met [1.2].

Please keep in mind that this is not an exhaustive list of requirements and you should consult with a legal professional to ensure compliance with all applicable securities laws in Washington.

Source(s):
Jurisdiction

Washington