Asked in Securities Law for New York

Q: Can I do royalties crowdfunding (profit sharing) for only a single property inside the company (LLC)?

We are a holdings company with many daughter-brands, each an independent venture, but only the holdings company is a registered LLC. We’d like to sell royalties (percentage of the profit) from these ventures in a crowdfunding campaign. Is that legal?

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1 Lawyer Answer
Michael Gilman
Michael Gilman
Answered
  • White Plains, NY

A: Selling royalties to passive investors takes you into the realm of securities regulation, and this would have to be a registered offering or have an exemption from registration. For crowd funding, most offerings will utilize 506(c) which allows general solicitation but requires investors to be accredited. Please don't hesitate to discuss further.

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