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Equity Lines In Going Public Transactions

By Expert Author: Brenda Hamilton

In going public transactions, issuers consider many captial raising options. One capital raising option is the equity credit Line Most equity lines are structured so that the investor enters into an agreement with the Company giving it has the right, during going public lawyer the equity line term and subject to certain conditions, to put its securities to the investor.
Equity credit lines are also commonly strucutred in private placements under Rule 506 with an obligation for the Company go public to file a registration statement on Form S-1 to register the resale of the securities sold under the equity line.This blog post addresses the use of equity lines in going public transactions involving Rule 506 offerings and resale registration on Form S-1.
Where a Rule 506 offering is combined with a Form S-1 registration statement, due to the delayed nature of the investment, and because the investor’s funds are not at risk at the time the resale registration statement is filed, the SEC deems the registration to be an indirect primary offering.
Under these circumstances, the company may register the “resale” of the securities before exercising the “put” under limited circumstances. The company must complete ” the Rule 506 offering with respect to all of the securities covered by the Form S-1 registratoin statement that are being registered resale BEFORE the Form S-1 is filed with the SEC; and the investor must be identified as an underwriter as well as a selling shareholder in the prospectus.
If the Company cannot meet these conditions, the company may register the securities for resale if it is primarily eligible to use Form S-3 and disclose the potential violation of Section 5 in connection with the Rule 506 offering.
For further information about this article, please contact Brenda Hamilton, Securities Attorney at 101 Plaza equity Real S, Suite 202 N, Boca Raton Florida. This memorandum is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. For more information concerning the rules and registration statement regulations affecting the use of Rule 144, Form 8K, FINRA Rule 6490, Rule 506 private placement offerings, Regulation A, Rule 504 offerings, SEC reporting requirements, SEC registration on Form S-1 and Form 10, Pink Sheet listing, OTCBB and OTCMarkets disclosure requirements, DTC Chills, Global Locks, reverse mergers, public shells, go public direct transactions and direct public offerings please contact Hamilton and Associates at 561-416-8956 or info@securitieslawyer101.com. Please note that the prior results discussed herein do not guarantee similar outcomes.
Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855
http://www.securitieslawyer101.com

Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855
http://www.securitieslawyer101.com

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