Section 4(2) of the Securities Act of 1933 exempts from the registration requirements of that Act "transactions by an issuer not involving any public offering.” This is the so-called "private offering" provision in the Securities Act. The securities involved in transactions effected pursuant to this exemption are referred to as restricted securities because they cannot be resold to the public without prior registration. They are also sometimes referred to as "investment letter securities" because of the practice frequently followed by the seller in such a transaction, in order to substantiate the claim that the transaction does not involve a public offering, of requiring that the buyer furnish an investment letter representing that the purchase is for investment and not for resale to the general public. The private offering exemption of Section 4(2) of the Securities Act is available only where the offerees do not need the protections afforded by the registration procedure.
The Michigan Investment Letter for a Private Sale of Securities is a legal document used in the state of Michigan for the private sale of securities. This letter outlines the terms and conditions of the investment, providing important information to potential investors. It is a crucial document that ensures compliance with state and federal securities laws and protects the rights of both the issuer and the investor. The Michigan Investment Letter includes various key elements to ensure it is comprehensive and informative. It typically begins with a clear statement of the purpose of the letter, which is to offer and sell securities in a private placement. The letter provides details about the issuer, including its legal name, location, and contact information. Furthermore, the letter provides a description of the investment opportunity, including information about the securities being offered. This includes details about the type of securities being sold, such as common stock or preferred stock, as well as the number of shares or units available and the purchase price. In addition, the Michigan Investment Letter outlines the risks associated with the investment, ensuring that potential investors are fully informed. It may discuss factors that could affect the value or liquidity of the securities, such as market conditions, industry risks, or specific risks related to the issuing company. The letter also includes information regarding the intended use of proceeds from the sale of securities. This could include details about the company's plans to expand operations, develop new products, hire additional staff, or repay debts. Another important aspect of the Michigan Investment Letter is the disclosure of any conflicts of interest. This ensures that potential investors are aware of any relationships between the issuer and its directors, officers, or other affiliates that could impact the investment. It is important to note that there may be different types of Michigan Investment Letters for a Private Sale of Securities, depending on the nature of the offering or the specific requirements of the issuer. Some examples of these letters include: 1. Michigan Investment Letter for Private Placement of Common Stock: This type of letter specifically addresses the sale of common stock in a private placement offering. It includes information about the voting rights and ownership percentage associated with the common stock. 2. Michigan Investment Letter for Private Placement of Preferred Stock: This letter focuses on the sale of preferred stock in a private placement offering. It outlines the rights and preferences associated with the preferred stock, such as dividend payments and liquidation preferences. 3. Michigan Investment Letter for Private Placement of Convertible Securities: This type of letter is used when the securities being offered can be converted into another form of security, such as common stock or preferred stock. It provides details about the conversion terms and any additional rights or benefits associated with the convertible securities. In conclusion, the Michigan Investment Letter for a Private Sale of Securities is an essential document for private placements in Michigan. It contains vital information about the investment opportunity, disclosure of risks and conflicts of interest, and outlines the terms and conditions of the offering. These letters are tailored to fit the specific type of securities being offered, such as common stock, preferred stock, or convertible securities. It is crucial to consult with legal professionals who specialize in securities laws to ensure compliance with all applicable regulations.
