Exemptions From Federal and State Securities Laws:

Are you a small business owner in California looking for a legal way to raise capital without being a licensed broker-dealer? What federal and state securities laws matter? Do you have to file any documents with the federal or state government? Does your company qualify for an exemption?

Federal Laws:

In light of the Great Depression, President Franklin D. Roosevelt created the Securities Exchange Commission as a means to promote investor confidence. Two of the safeguards that were included in the New Deal were the Securities Act and the Exchange Act.

Generally, the Securities Act requires companies raising capital to file a registration statement with the SEC. This is to provide investors with information that can assist them in making their investment decisions. The Exchange Act requires companies to file reports with the SEC. These reports include information about business operations, financial conditions, and management.

It is important to keep in mind that your company must be in compliance with both federal and state securities laws. This is because a particular offering may be exempt from a federal law but not exempt from a state law.


Your company may qualify for an exemption provided within these laws. This would mean that you do NOT have to satisfy the SEC’s registration and reporting requirements. Below is an exemption from California State Law that may be applicable to your company. (Please note that for any sort of securities law exemption, it is necessary that you meet ALL of the requirements of the exemption.)

SEC Rule 1001 – California Limited Offering Exemption

Under this rule, California companies are not required to satisfy the SEC’s registration requirements for offers and sales of securities if and only if they meet the following requirements:

(a) The securities are in amounts of up to $5 million.
(b) The offering is made to a “qualified purchaser.”

Web reference. Please visit http://www.sec.gov/ for source materials on this topic.

About Adishian Law Group, P.C.

Adishian Law Group is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco. As of March 2013, Adishian Law Group, P.C. has represented individual and corporate clients located across 20 California counties, 4 States outside of California and 9 foreign countries — in over 340 legal matters.

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