33 Act

The 33 Act refers to the federal Securities Act of 1933. Any time a company attempts to raise capital through the issuance of its securities it becomes subject to a variety of laws regulating the offering and selling of securities. The most important of these are the 33 Act and the States’ securities acts. These laws make it unlawful for any person to offer, sell, or deliver any “security” unless a registration statement meeting requirements contained in the law is in effect as to the security or an exemption to the registration requirements applies.

The “securities” these laws apply to have been broadly defined by the statutes and courts. They include corporate stock and debt instruments as well as similar interests issued by individuals, partnerships, and joint ventures. They also include other types of “investment contracts” that are not commonly thought of as securities. For example, a simple promissory note issued by an early-stage company can be classified as a security under the right circumstances.

Detailed disclosure or ready access to information must be given to investors in connection with a securities offering. This is generally true whether the offering is registered or exempt from registration. This disclosure is usually made through the use of a registration statement and prospectus (also referred to as an offering circular) that contains pertinent information concerning the offering, the securities being offered, and the entity issuing the securities. In limited circumstances, however, such as venture capital transactions involving only certain specially qualified (or “accredited”) investors, the information may be made available in other ways that do not involve the preparation of an extensive offering memorandum.

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