At BrewerLong, we help Florida businesses thrive by guiding them through every stage of the business lifecycle, including investment compliance. Since 2008, our Orlando business attorneys have partnered with small and mid-sized companies across central Florida. Whether you are attracting local investors or working with out-of-state or international backers, we provide the legal clarity you need. Our collaborative, client-centered approach means you get tailored advice without unnecessary red tape.
Business investments are essential for growth. However, business owners must comply with state and federal regulations on business investments to ensure their fundraising efforts do not impede a fair and transparent financial market. At the federal level, the U.S. Securities and Exchange Commission (SEC) enforces rules about securities offerings. In addition, Florida has registration and exemption rules through the Florida Office of Financial Regulation. Understanding these legal rules and systems, which include filing documents and meeting legal requirements, is crucial to avoid penalties and ensure a smooth path to funding.
Key Federal Regulations on Business Investments
The federal government classifies most business investments as securities, which are financial interests such as:
- Company ownership, like stocks or a membership in a limited liability company (LLC);
- Debt, such as loans and mortgages; and
- Rights to share in profits.
Federal law requires companies to register securities with the SEC before selling them unless they qualify for an exemption. Companies that cannot or do not register their securities must carefully review which exemptions apply to their situation, as relying on an incorrect exemption could result in penalties.
Regulation D (Reg D) Exemptions
Regulation D outlines exemptions that businesses can use to raise money from investors without going through the full SEC registration process, including:
- Rule 504—permits raising up to $10 million within 12 months, generally with fewer federal disclosure requirements;
- Rule 506(b)—allows unlimited fundraising from an unlimited number of accredited investors and up to 35 non-accredited but sophisticated investors; and
- Rule 506(c)—permits public advertising if all investors are accredited and their accreditation is independently verified.
An accredited investor is generally a person or entity with high income or net worth, such as individuals earning at least $200,000 annually or having $1 million in assets excluding their home. Although not accredited, sophisticated investors are those with enough financial knowledge to assess investments.
Crowdfunding
Regulation Crowdfunding (Reg CF) enables businesses to raise money from a large number of everyday investors through online platforms, with the following requirements:
- Can raise a maximum of $5 million in a 12-month period;
- Must conduct offerings through an SEC-registered crowdfunding platform; and
- File business and financial information with the SEC.
This option helps startups connect with a broader pool of investors, including those who are not wealthy or experienced.
Regulation A (Reg A+)
Regulation A+ allows businesses to publicly raise funds without going through an initial public offering (IPO) under two different tiers. Under federal and state approval and filing requirements, tier one offerings allow companies to raise up to $20 million. At tier two, businesses can raise up to $75 million with more extensive financial disclosures and ongoing reporting to regulators. This path allows non-accredited investors to participate with greater flexibility.
State Regulations on Business Investments
In addition to federal law, Florida businesses must comply with Florida’s state regulations on business investments. The Florida Office of Financial Regulation (OFR) enforces the Florida Securities and Investor Protection Act. Even if your investment offering qualifies for a federal exemption, you still must meet any Florida filing or notice requirements.
Florida Securities and Investor Protection Act
Florida’s Securities and Investor Protection Act provides a broad set of regulations for the offering and sale of securities in the state. Some key provisions include:
- Requires registration with the OFR unless an exemption applies;
- Authorizes the OFR to investigate businesses, impose fines, suspend or revoke licenses, or file lawsuits for violations of state securities laws; and
- Companies offering investments must provide potential investors with complete and accurate information about their finances, business operations, and risks.
Even if the company complies with federal rules, violating state securities laws can lead to serious consequences, including fines, reputational damage, and lawsuits.
Registration Exemptions
Florida offers several exemptions from its registration requirements, including:
- Intrastate exemption when the business and all investors are located in Florida,
- Private offerings to a limited number of Florida investors without registration, and
- Allow sales only to accredited investors.
Even if an exemption applies, businesses may still need to file notices with the OFR to disclose their activities.
BrewerLong Can Help You Navigate Investment Laws with Confidence
Business investments can turn dreams into reality—if done legally and strategically. At BrewerLong, we guide business owners through the regulatory maze of federal and Florida securities laws. From selecting the right exemptions to drafting disclosure documents and handling required filings, we work alongside you to protect your business and help you grow.
We proudly serve small and mid-sized businesses across central Florida with clear, practical, and personalized legal advice. Contact us today to schedule a consultation.
Rate this Post
Loading...