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STEP 10

AOTSPV_Webimages_Compliance OutlineSPVs are required to complete and file security filings at both the federal and state level. The SEC requires a Form D and states require blue-sky filings in every state in which the SPV investors reside.

When you utilize a capital-raising SPV to pool capital for the purpose of investing in private assets, such as an entrepreneurial startup company, the Securities and Exchange Commission (SEC) has defined these actions as “selling securities.” In addition, state security and exchange commissions also identify said behavior as “selling securities.” This step of the process requires Legal and Compliance expertise.

Federal and state authorities alike want to know about everyone selling securities in their respective jurisdictions. In order to legally sell securities, you must meet a number of both federal and state compliance filing requirements. In addition, you will need to pay specified fees on both the federal and state levels. In order to comply with federal security laws, our entity will need to file a Form D, “consent to service of process,” with the SEC.

On the state level, security laws require our SPV to complete blue-sky filings with every state in which any of the investors that has participated in the SPV resides. Blue-sky filings can reach near-Byzantine complexity and be quite expensive, particularly in New York.

In an effort to make compliance more consistent and less onerous, the North American Securities Administrators Association (NASAA) established the Electronic Filing Depository System (EFD). This allowed issuers to file Form D and applicable fees to various states at a single time. Issuers receive electronic receipts as proof of compliance, and can monitor the progress of each state’s review. However, not all states participate in all of these “safe harbor” exemptions, so it is advisable to check the EFD filing website to determine which states use EFD. The practical upshot of this is that securities requirements are not something to trifle with, and may require significant specialized expertise.

In order to serve our clients with best-in-class legal and compliance expertise, Assure co-founders have formed an affiliated law firm. The Fund Law Group specializes in venture investment entities, transactions and administration, from SPVs to venture funds and syndicate deals. Our legal team experiences more venture investment deals than most law firms will ever see. In the past six years, we have managed more than 5,100 deals.

AOTSPV_Webimages_Step10 Molecule

After we have cleared the legal and compliance bar with the SEC and state-specific entities on all securities requirements related to our capital-raising SPV, we are ready to move on to STEP 11: CIRCLE BACK AND MAKE SURE EVERYTHING IS FINALIZED FOR THE INVESTMENT.

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