Is it legal to link on your web page to your startups's AngelList profile?
US-incorporated companies are prevented by the SEC from soliciting investments in exchange for private securities.
How legal is it to link to your startup's profile on AngelList, for instance?
3 Answers
First off the SEC rules are not limited to Delaware corporations, they apply to all corporations soliciting to investors in the United States.
Next the most important thing you can do is include a disclaimer any time you talk about your stock, investors etc. Something like:
This news release is for informational purposes only and is neither anAs long as there is no possibility that what you are posting on your website could be misinterpreted as a solicitation you should be fine.
offer to purchase nor a solicitation of an offer to sell any
securities.
-
Agree that solicitations are not limited to DE-incorporated companies. What is the exact delineation though, since the solicitation can be made online? The country of incorporation? This German company, for instance, has a rather obvious solicitation, which could be viewed by investors in the United States: http://www.telecorp.com/ – Dan Dascalescu 12 years ago
-
In general a countries laws are applicable within that country. So in the case of the US, the SEC deals with both 1) activities by anyone within the US and 2) activities by US Companies anywhere. If a company in Germany has no activities in the US and never communicates directly with a US citizen then what they do on their website is their business. In any case what telecomp has doesn't look improper by US standards. For an example of what is perfectly OK in the US see http://investor.gm.com/#.html?evar10=gmcom_investors.html – Jonny Boats 12 years ago
So, first of all, let's be clear of what's prohibited: you cannot engage in a general solicitation for the sale of the securities. The concern is investor protection. What's not prohibited? General advertising about your company, a general statement that you're seeking to develop relationships with angel investors, etc....
So, look at your angellist profile (the part that's available to the general public) -- does it say things like "we are actively seeking investors for our Series A round"? If it does, then it's probably a general solicitation, even if you don't link to it from your website. If there's nothing like that, then it's not a general solicitation, and it doesn't matter if you link to it from your website (provided, of course, that the link doesn't say something like "Interested in investing? Here's our angellist profile.")
Incidentally, the SEC has 270 days under the JOBS act to create rules (see http://www.gpo.gov/fdsys/pkg/BILLS-112hr3606enr/pdf/BILLS-112hr3606enr.pdf search for '270'), and they're not likely to help anyway -- those rules are likely to apply only to crowdfunded offerings, and not to private offerings in general.
This can be a tricky area, and your state may have its own requirements, so best to check with your own attorney.
-
Just found out that the SEC has 90 days to create rules on the particular provision on general solicitation. Source: http://www.quora.com/U-S-Federal-State-Local-Law/If-doing-X-is-illegal-now-in-the-US-but-an-Act-is-signed-by-the-President-tomorrow-when-does-it-become-legal-to-do-X/answer/Steve-Reaser?__snids__=38240856#ans1123325 – Dan Dascalescu 12 years ago
Just got an answer from Gust founder David S. Rose, on Quora:
My understanding [check with your own counsel, which I am not!] is that where you get into trouble is actually soliciting the purchase or sale of equities, including doing things like stating prices and terms. "Bulletin board listings", which simply describe the company, are acceptable, which is why sites like Gust and AngelList are operating within the law.Also note that the JOBS Act of 2012 was signed by the President on April 5, 2012, after which the SEC has 90 days to draw up the regulations on lifting the ban on general solicitations.
I say go ahead and post your Gust link all over the place! :-)
However, merely linking to your AngelList/CapLinked/Go BIG Network/Gust profile would apparently have been okay. Here's another legal professional expanding on this on Avvo.
