Corporate & Securities Filings For a Startup

Louis Lehot, business lawyer and partner at Foley & Lardner LLP in Silicon Valley, and formerly the founder of L2 Counsel, P.C.

Louis Lehot

When you form a company, there are several documents that are essential to file to comply with state and federal laws. This article provides an overview on the corporate and securities filings a startup will require.

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Corporate Filings

Corporate filings are required upon incorporation of your company and following several key events that will occur through your company’s lifecycle. Though corporate filings are state-specific, the following highlights several events that commonly require a corporate filing.

· Formation and stockholders’ rights

When your startup is first formed, you must file a charter. The preferred jurisdiction for filing this charter is Delaware, where the charter is called the “certificate of incorporation”. In California, the charter is referred to as “articles of incorporation.” Regardless of where the charter has been filed, it will set forth the classes of stock held by the corporation, the rights and privileges associated with those classes, and the corporation’s purpose and agent’s address. As a corporation authorizes additional stock classes or series, an amendment to the charter must be filed. Additional corporate filings are listed below.

  1. Change to corporation name, purpose, or other: An amendment to the charter must be filed if the corporate name is changed, the corporation’s purpose is revised, or if the registered agent is different.
  2. Tax statements and reports: The corporation must file an annual tax statement or report, this often needs to be filed before a corporation can pay its annual taxes.
  3. Operating in other states: If your corporation operates or does business in states aside from where it is incorporated, you must file to do business in each of the additional states. As corporate filings are state-specific, it is best to understand what is required to operate in each additional state. For example, a foreign corporation that also operates in California must file an information statement within 90 days of the company’s incorporation.

Securities Filings: State & Federal

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When a corporation issues any securities, it must ensure it complies with state and federal securities laws. Securities issuances that must comply with these laws include stocks, stock purchasing options, and compensatory equity awards, for example.

· Federal securities filings

Federal securities laws require a corporation to either register with the SEC or to find an exemption. Registering with the SEC is often a complex process, so the majority of startups choose to find an exemption. Certain exemptions, however, still require a filing. One of the most common filings required is a Form D associated with the sale of any securities. This is required even for offerings made under Rule 506, a common federal securities exemption. Corporations that choose a different exemption can avoid the Form D requirement.

· State securities filings

State securities laws will be different for each jurisdiction, so it is best to have your legal team review what is required for your corporation. For California securities laws, 25102(f) and 25102(o) notices are commonly filed. The 25102(f) notice is related to the sale of securities and must be filed every time a corporation issues stock to comply with California securities laws. The 25102(o) notice must be filed in regards to compensatory equity issuances, even if Rule 701 for federal exemption is used. Both of these notices can easily be filed online.

Louis Lehot is a partner and business lawyer with Foley & Lardner LLP, based in the firm’s Silicon Valley, San Francisco and Los Angeles offices, where he is a member of the Private Equity & Venture Capital, M&A and Transactions Practices and the Technology, Health Care, and Energy Industry Teams. Louis focuses his practice on advising entrepreneurs and their management teams, investors and financial advisors at all stages of growth, from garage to global. Louis especially enjoys being able to help his clients achieve hyper-growth, go public and to successfully obtain optimal liquidity events. Louis was the founder of a Silicon Valley boutique law firm called L2 Counsel. He previously served as both the co-managing partner and co-chair of the emerging growth and venture capital practice of a global law firm in Silicon Valley.

Louis Lehot is a partner and business lawyer with Foley & Lardner LLP, based in the firm’s Silicon Valley office. Follow on Twitter @lehotlouis