FREQUENTLY ASKED QUESTIONS
In September 2012, the Jumpstart Our Business Startups Act passed to help smaller companies raise capital as well as broaden the fundraising scope for startups, private equity, investment vehicles, and venture capital funds. While beneficial to the issuing company, the JOBS Act comes with compliance burdens that can be challenging.
The JOBS Act changed two things. For the smallest companies, the JOBS Act allows small offerings of under $1 million to be funded by almost anyone, provided the investment requirements be small. This provision allows crowdfunding of startups and small businesses, although the company being funded is not allowed to advertise itself. Investors must be directed to newly created crowdfunding portals.
For small companies, the JOBS Act allows general solicitation for certain private offerings as long as those offerings are made to an unlimited number of accredited investors. Under this ruling, the company must verify that the investors are indeed accredited by utilizing tax returns, bank statements, brokerage statements, credit reports, etc. - all services that The Charter Oak Group provides. Click here for a list of our Services.
The JOBS Act increased the amount that can be raised through a rarely used type of private offering from $5 million to $50 million and made those investments public securities, which means they can be sold without restriction.
For companies with less than $1 billion in revenue that are about to go public, the JOBS Act changed some of the IPO requirements and reduced the amount of information that needed to be filed. These types of companies fall into a new type of company that the JOBS Act named the Emerging Growth Company.
An accredited investor is a term used by the Securities and Exchange Commission (SEC) under Regulation D to refer to investors who are financially sophisticated and have a reduced need for the protection provided by certain government filings. Accredited investors include individuals, banks, insurance companies, employee benefit plans, and trusts.
In order to qualify as an accredited investor, he or she must meet at least one of the following requirements:
- - Any natural person whose individual net worth, or joint net worth with that person's spouse, exceeds $1,000,000;
- - Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;
- - Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in ยง230.506(b)(2)(ii); and
- - Any entity in which all of the equity owners are accredited investors.
A "broker" and "dealer" are U.S. regulatory terms and although they are seen together, they represent different entities. A broker executes orders on behalf of clients, that hold a brokerage account. This, to an investor, is the person(s) that helps them buy and sell securities.
A dealer, on the other hand, trades for its own account. Apart from buying and selling securities, a dealer also makes markets in securities, underwrites securities and provides investment services to investors.
An Issuing Company is a company that is offering securities as an attempt to raise funds.
A Sponsor is an influential investor who creates demand for a security because of their positive outlook on it.
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Redhawk Investment Group, LLC offers direct and alternative oil and gas investment opportunities that enable investors to participate in the potential cash flow and the unique tax benefits associated with oil and gas investments. There are significant risks associated with investing in oil and gas offerings. The information contained in this website is for informational purposes only and is not a solicitation to buy or sell any securities. Information on this site is not intended to be used as investment or tax advice. Consult your investment advisor or tax advisor concerning the current tax laws and effects on your personal tax situation.