A security is a legal instrument sold to investors for money, typically a promissory note or investment contract. The Supreme Court defines an investment contract as money invested in a common enterprise expecting profits from the promoter's efforts. Securities must be registered with regulators unless an exemption applies.
What's a security? A security is a legal instrument you sell to private investors in exchange for their money. Securities commonly sold by small businesses and real estate investors include promissory notes and investment contracts. A promissory note is a legal contract you provide to someone who loans you money. It's basically a promise to pay, usually with a remedy if you don't. But what are investment contracts? In 1946, the U.S. Supreme Court defined investment contracts as an investment of money in a common enterprise with an expectation of profits based solely on the efforts of the promoter. If you sell ownership interests in your company to investors who expect a share in the company's profits, you're selling investment contracts, and those are securities. The sale of securities must be registered with the securities regulators unless an exemption applies. Each securities exemption has its own set of rules. That's where we come in. We can help you select and comply with an appropriate exemption for your securities offering.
