Integration Considerations and Number of Investors for a Private Placement

Another consideration as to whether the offering is public or private is whether the offering is part of larger offering being made, or to be made. This is called integration. In short, an issuer cannot skirt the securities laws by breaking up essentially the same offering into smaller parts done over time. Usually, unless a business is involved in making multiple offerings, the question of integration is unlikely to come up.

Of course, the more people the issuance is offered to, the more it is like a public offering. Keeping the number small, under 25, is certainly a good start, however, it is only one factor that is considered. Even offering to a very small number may not prevent the offering from being treated as a public offering if other factors cannot be fully satisfied.

Next up…SEC Rules Providing Safe Harbor for Private Placements: General Condition of Integration…

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