Raise money under the SEC's New Regulation A+

All the things you can do to raise money under the SEC’s New Regulation A+  since the SEC extended an exemption policy for smaller issues as required under Title IV of the Jumpstart our Business Startups ("JOBS Act").

Highlights:

1.  General Advertising and Solicitation Allowed (including internet and social media)

2.  Raise up to $50 million

3.  All investors whether accredited or unaccredited

4.  No requirement to verify investor status

5.  No limit on amount of investors

6.  Easier SEC registration process (Tier I)

7.  Avoid State Blue Sky Filing requirements (Tier II)

On March 25, 2015, the SEC adopted final rules implementing Title IV of the “Jumpstart Our Business Startups Act” (the “JOBS Act”) by amending SEC Regulation A to make two new exemptions for securities offerings by private U.S. and Canadian companies, which is now known as Regulation A+.

The SEC released a statement that:

"The updated exemption will enable smaller companies to offer and sell up to $50 million of securities in a 12-month period, subject to eligibility, disclosure and reporting requirements."

These exempt offerings are referred to as Tier 1, for offerings of up to $20 million annually, and Tier 2, for offerings of up to $50 million annually. 

Tier 1, which would consist of securities offerings of up to $20 million in a 12-month period, with not more than $6 million in offer by selling security-holders that are affiliates of the company issuer. The increase in the offering maximum amount from $5 million to $20 million could make capital raises under this alternative more attractive to a number of companies in need of capital as the cost of preparing an offering memorandum can be a smaller amount to that of the offering size.  

Tier 2, which would consist of securities offering of up to $50 million in a 12-month period, with not more than $15 million in offer by selling security-holders that are affiliates of the issuer.  The new Tier 2 creates a form of "mini-public offering" with a number of reporting requirement that resemble those of a normal full fledged offering, for example, two years of audited financial statements and the new periodic and current reporting requirements.

The rules limit the amount of securities that can be sold by selling shareholder at the time of the company issuance of its first Regulation A+ offering and during the 12 months following to no more than 30% of the total offering price of any instance of that offering. The registration process is done online via the SEC’s program called EDGAR. Tier 2 offerings are exempt from state blue sky laws and Tier 1 offerings are not exempt.

The new SEC regulations are complex and often technical.  The foregoing article should not be taken as legal advice or presupposes that all of the information is included with respect to any particular company’s or individual’s circumstances. 

COPYRIGHT & DISCLAIMER

Tifanie Jodeh is Partner at Entertainment Law Partners dedicated to corporate, business and entertainment affairs.  Tifanie Jodeh grants column recipients permission to copy and distribute this column and distribute it free of charge, provided that copies are distributed for educational and non-profit use, no changes or revisions are made, all copies clearly attribute the article to its author and include its copyright notice.

DISCLAIMER: Readers should consult with a lawyer before solely relying on any information contained herein.

Navigating the Cannes Film Festival

By:  Steven G. Kaplan.   Whether it is your first or twelfth time to the Cannes Film Festival, this article will help you navigate the complexity of the festival and market. I first attended Cannes in 1999 to support the international sales efforts on my first feature, TERROR TRACT. Since then, I've attended the festival every year so my comments derive from personal experience (some painful, some not).

1. Stay in Cannes. I really cannot emphasize enough how important it is to stay in Cannes and not outside. Walking distance from the Palais (where most of the sellers have their offices) and the hotel row on the Croisette is critical. Sole exception would be the Hotel Du Cap, particularly if you are a financier or just want your privacy, then Du Cap is the place to be. Most of the major film industry heavy weights stay there, but it is a 25 minute drive into the part of town where most of the action is. Don’t stay at Du Cap if your meetings and events mostly take place in town. The best locations to stay would be center pointe on the Rue la Croisette, between the Majestic Hotel and the Carlton Hotel, or in an apartment behind those hotels to the main drag. Another great option is staying on a yacht. Even though the staterooms tend to be small, there is nothing like the convenience and glamour of spending your time in Cannes on a yacht.

2. Rent a Car? What’s the point? You have to hassle with parking, the expense and everything that goes with that. Taxis are plentiful and don’t cost that much. Exception would be if you are staying out of town or at Du Cap.
3. What About My Stuff? There is a fair amount of risk of theft or loss of your personal possessions. I follow a very simple rule: carry everything on your body that you can absolutely not afford to lose. This includes your passport, money and credit cards. Hide everything you care about otherwise in your room. Only leave things behind that you care nothing about. With iPads and tablet devices, laptop is no longer necessary unless you are doing heavy duty writing or drafting documents.
4. Advance Planning. The best way to make Cannes effective is to plan in advance. There is so much happening that the chaos theory frequently rules. I find that starting your meetings at 11 a.m. is most effective to avoid last minute cancellations from too much partying the night before. Schedule meetings and events in advance but remain flexible as everyone’s schedule is constantly in flux. A typical day would include numerous meetings, cocktail hours (2 or 3), dinner meeting, premiere and afterparty.
5. Things to Pack. Necessities: bring a Tux or Formal Dress, a passport and credit cards (better exchange rate). All of the screenings at the Luminere (the superbowl of movie theaters) require formal wear for the men (including bow tie- NO neckties allowed) and formal dress for the ladies. They won’t let you in without it.
6. Credentials. You must get a Marche du Film credential if you want to see any screenings. A market badge is critical if you want to enter the Palais to meet with buyers or sellers. If you have produced or executive produced a film, register for the Producer’s Network. American Pavilion pass is good if its your first time in Cannes at the festival and need a good meeting spot with WiFi.
7. Pace Yourself. The Cannes Film Festival is a whirlwind of meetings, panels, network opportunities, red carpet premieres, yacht parties, late night drinks and rockstar parties. Pace yourself (see #4). Need I say more?
Most importantly, have fun and don’t get too stressed.  After all, you are in Cannes for the Superbowl of film festivals and film markets. It could be worse.
Entertainment Law Partners will be in attendance at the Cannes Film Festival from May 17-23. To set a meeting to discuss your project, please email us.                       

COPYRIGHT & DISCLAIMER
Steven G. Kaplan is Partner at Entertainment Law Partners dedicated to corporate, business and entertainment affairs.  You may contact him at Steve@entlawpartners.com.

Steven G. Kaplan grants column recipients permission to copy and distribute this column and distribute it free of charge, provided that copies are distributed for educational and non-profit use, no changes or revisions are made, all copies clearly attribute the article to its author and include its copyright notice.

DISCLAIMER: Readers should consult with a lawyer before solely relying on any information contained herein.