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Anyone who offers or sells stock or other securities must comply with federal and state
securities laws or they will face criminal penalties (including jail sentences and monetary fines).
Every offer or sale
of stock must be registered or qualified in every relevant jurisdiction (state and federal),
unless an exemption in a particular jurisdiction applies. If you are issuing stock
entirely within
California to fewer than 35 people who are very familiar with the corporation's operations, you have not advertised,
and you know the investors well, it is likely you will qualify for a
California
exemption under Corporations Code Section 25102(f) and that you will be
exempt from all federal filing requirements. If so, you can avoid the filing of long
federal forms, state permit applications, prospectus requirements, etc., and are only required
to file form 25102(f).
California requires that this form be filed online at
https://web2.corp.ca.gov/loenapp/login.jsp.
In addition to filing this form, please be aware that the
law requires that purchasers be
given full
and accurate disclosure of all material aspects concerning the business they are purchasing an interest in.
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| Forms to use | |
25102(f) Securities Registration |
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| Restrictions | |
You can only use this form if:
- You have 35 or fewer purchasers (husband and wife count as one purchaser),
- You have not advertised the shares for sale.
- ALL purchasers have a substantial pre-existing relationship with the corporation, its officers or directors
and full knowledge of the corporation's affairs.
- Each purchaser signs a good faith statement that (s)he is purchasing for themselves
and not with a view to resell.
- All of your purchasers live in California and all offers and sales are made in California.
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| When to file | |
Within 15 days of issuing stock.
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| How to complete the form | |
You must complete this form online. If you do not have online access, you may file by paper if you file for a "hardship".
First, obtain an ID and password at https://web2.corp.ca.gov/loenapp/login.jsp. Then, complete the form as follows:
| Line | What to enter |
| 4 | California (assuming that is where you incorporated). |
| 5 | "Common stock". If you are selling preferred or another
type of stock, do not use the Articles of Incorporation, but contact an attorney
for the correct procedure. |
| 6 | Total value of the stock you are selling. The left
and right columns should be the same, unless you are selling to shareholders
out-of-state - in which you cannot use this form! Show how much
stock was purchased for cash and how much for non-cash. |
| 7 | Put "none". |
| Notary | If you file online, you do not need to notarize this form. If you file by mail, you do. | |
Pay the fees below with a credit card. |
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| Cost | |
The cost varies depending on the total value of the stock that you are selling.
| Value of Securities | | Fee |
| $25,000 or less | |
$25 |
| $25,001 to $100,000 | |
$35 |
| $100,001 to $500,000 | |
$50 |
| $500,001 to $1,000,000 | |
$150 |
| over $1,000,000 | |
$300 |
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| If you issue more stock | |
You must file this form every time that you issue new stock. Before doing so,
consult an attorney to make sure that you are complying with the law and aren't causing
tax problems for your
original shareholders. |
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| File electronically | |
File the form and pay electronically at http://www.corp.ca.gov/LOEN/default.asp.
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| Questions? | |
Contact the Department of Corporations at(866) 275-2677 or 866 ASK CORP.
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