33 Act . . .
refers to the federal Securities Act of 1933. Any time
a company attempts to raise capital through the issuance of its
securities it becomes subject to a variety of laws regulating the
offering and selling of securities. The most important of these are
the 33 Act and the States’ securities acts. These laws make it
unlawful for any person to offer, sell, or deliver any
"security" unless a registration statement meeting
requirements contained in the law is in effect as to the security or
an exemption to the registration requirements applies.
The "securities" these laws apply to have
been broadly defined by the statutes and courts. They include
corporate stock and debt instruments as well as similar interests
issued by individuals, partnerships, and joint ventures. They also
include other types of "investment contracts" that are not
commonly thought of as securities. For example, a simple promissory
note issued by an early stage company can be classified as a security
under the right circumstances.
Detailed disclosure or ready access to information
must be given to investors in connection with a securities offering.
This is generally true whether the offering is registered or exempt
from registration. This disclosure is usually made through the use of
a registration statement and prospectus (also referred to as an
offering circular) that contains pertinent information concerning the
offering, the securities being offered, and the entity issuing the
securities. In limited circumstances, however, such as venture capital
transactions involving only certain specially qualified (or
"accredited") investors, the information may be made
available in other ways that do not involve the preparation of an
extensive offering memorandum. See:
Going
Public, Investment Reps,
IPOs (Initial Public Offerings),
Private
Placements, Reg D,
Restricted
Securities, SEC (Securities and Exchange
Commission), 10b5.