Are product investments monitored by securities laws (vs. Company Equity)?
I own a private company. I am looking for investors to help us commercialize a product. I do not wish to offer private equity (PPM) because I am not offering equity in my company. I am looking to offer equity in the product. Therefore the investor would receive royalty proceed shares of 'all product sales'. Is this investment model regulated by US Securities laws? Is it any different than selling company shares from the governments perspective? If so, how? If not, why not?
2007-02-04 09:21:45 · 1 answers · asked by Entreprenuer 1 in Business & Finance ➔ Investing
This isn't regulated by the SEC. You're basically looking for silent partners with limited rights. You can have a lawyer draw up a contract stating the details. Any disputes would simply fall under contract law. Keep in mind, if you sell more than 100% of the royalties to a product, it's fraud (amoung other things), and you'll be looking at serious jail time.
2007-02-04 09:36:11 · answer #1 · answered by Michael E 5 · 0⤊ 0⤋