New York Business Lawyers

Blue Sky Tips for any Business-Anatomy of the New York Blue Sky Filing

by / Monday, 19 April 2010 / Published in Startup & Corporate, Venture Capital

Should the New York Business Corporation Provide Stock Certificates

As part of our private offering business venture capital series, we have discussed the importance of state blue sky filings.  In short, any business (e.g., technology company, film production, real estate venture, etc.) looking to raise capital under a so called Regulation D private offering, often has to comply with state notice and filing requirements (often referred to as Blue Sky filings.)

Each state has its own set of forms and requirements, which is a function of the amount of monies being raised and the contours of the private offering (e.g., rule 504 vs. 506, Private Placement Memorandum, etc.)  If you are raising up to a million dollars, a common route is the so called 504 regulation D private offering.   

The following is a breakdown of the Blue Sky New York Filing Process in that situation (Quick Note: Theatrical Productions must file a different set of papers for New York):

Step 1–Filings and Fees at the New York City Level

  • All of the following will be submitted to the New York Investor Protection Bureau with a cover letter (usually from the business attorney representing the venture) and usually thirty days after, the Bureau will acknowledge the filing and allow you four years to complete the offering:
    • A-File New York Form M-11, a form provided by the New York Bureau
    • It is a basic informational form that requests the following:
      • biographical data of officers of offering company
      • biographical information of offering company
      • basic details on the amount being raised, the intended use of funds, etc.
  • B-Pay the New York City Filing Fee
    • New York city charges a fee for the blue sky filing that is calculated based on the amount of money you are raising
    • The fee runs from 500-1200 dollars
  • C-File Form U-2 if your Company is Not a New York State Business Entity
    • If your business entity was formed in another state (e.g., Delaware), then you will also have to file a form U-2
    • This form allows the Attorney General to sue your business entity for alleged securities fraud in New York should the case arise
  • D-Provide Copies of the Offering Documents for Filing
    • Along with the above materials, you will provide copies of the controlling offering documents
    • Nearly all offerings have a suite of “offering documents”
      • These typically include:
        • a Private Placement Memorandum to advise the investor about the nature of the investment opportunity and the associated risks in a clear and direct fashion
        • A Subscription agreement to actually transfer title in the venture company equity to the investor
        • An operating agreement that defines the relationship between the

Step 2–Filings and Fees at the New York State Level

  • A-File Stale and Further State Notice, this is actually a set of two forms which are sent to the state
    • Together, they are a slimmed down version of the form M-11 and asks for mostly the same information
    • B- Pay the New York State Filing Fee
      • You will send two separate checks for 75 dollars each for each State and Further Sate Notice

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