Attracting Investors

mrblue1022 said:
Usually the SEC will leave you alone unless someone complains to them about you.

The SEC doesn't regulate public offerings, they regulate private offerings. Basically public offerings are like stocks, everyone who owns a piece of the company has a say in how it is run. Private offerings are when you have investors who put up the capital for the company and then let the company do their thing and wait to collect their checks.

Most films are almost exclusively private offerings so that the producer doesn't have to worry about a bunch of different people trying to run the show. Private offerings are strictly regulated by the federal and state governments. If you are raising money from investors make sure you get yourself a good lawyer, or at least read the local and state laws. Depending on how you structure your offering their guidelines as to how you can contact potential investors.

Also, in private offerings you are mostly limited to selling to accredited investors. In other words, the investors have to have the experience in the industry specifically and investing in general to know if they are investing their money wisely or not. Part of this is accomplished in your business plan. You need to make sure you clearly spell out the risks that the investors are taking. Don't sugar coat the risk either, the investor has to know that it's almost guaranteed that they are going to lose every dollar they invest in your film.

Finally, check out the American Job Creation Act. It provides a benefit for film investors. They can write off they total amount they invest in your film on their taxes for the same fiscal year that their money is spent.
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Wow.... I'm not a lawyer, but I play one on DVXuser.com... And for what its worth, you should always run from the police - they usually wont give chase...
 
Jim Brennan said:
The American Job Creation Act you are refering to...is that tied to section 181 of the Federal Tax Code?

http://www.taxalmanac.org/index.php...ain_Qualified_Film_and_Television_Productions
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Yes, the changes to section 181 were made by the American Job Creation Act.

I’m also eager to hear about my inaccuracies. I’ve been working with securities and investment law for eleven years and if I miss spoke about something I sure would appreciate you letting me know.
 
David Jimerson said:
I'm pretty sure everyone read you as saying that the SEC doesn't regulate publicly-traded stocks.
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Oops, my bad that is an incorrect statement. Sorry for that.
 
And this:

Most films are almost exclusively private offerings so that the producer doesn't have to worry about a bunch of different people trying to run the show.
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Perhaps that has been your experience, but my Attorney deals with situtations all the time where he recommends forming an S corp instead of a C corp so that you can accept deals from other corporations, which a C corp does not allow.

And while I would agree that the SEC probably won't notice a guy trying to raise 50 Gs to make a movie, the more you advertise your presence in a public way, the more the odds increase that they will investigate you.
 
Jim Brennan said:
That depends on the lega entity you create (S Corp, C-Corp, LLC, etc)
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Actually, with the exception of possible state laws, the legal entity you create for your film does not impact the number of investors that you can have (with the exception of S-Corps). The main purpose of your legal entity is for determining how your company (and investors) will be taxed. You should actually make your offering first, and once you have all your investors then decide on the type of legal entity that will be the best fit for your investors.
 
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