Subscription Agreement Risk Factors

Since risk factors are specific to the risks of a given business, there can be large differences between the types of risks a company discloses. However, in the category of company-specific risks, particular attention should be paid to the disclosure of risk factors related to the use of financial forecasts. While it is difficult to prepare accurate financial forecasts for each company, they are notoriously difficult to prepare for new operations due to the lack of a meaningful history of the company. Given that in some respects financial forecasts are likely to be inaccurate and may be materially inaccurate, it is essential that risk factors be specifically tailored to the type of financial forecasts provided and the assumptions and estimates underlying them. Two recent cases highlight the risks of insufficient disclosure of risk factors and why it is so important for an experienced lawyer to design industry- and company-specific risk factors. An offer protocol is intended for an issuing company in order to comply with both state and federal laws, regardless of where the OM is issued. A company that sells securities wants to ensure that they are not in violation of the law when addressing investors and are exempt from the registration requirement. In order to enable an investor to make an informed decision, the OM should contain all of the above-mentioned data, including past financial forecasts and financial performance and, of course, company and industry risk factors. Information about risk factors will not discourage experienced investors, who most likely know very well that such a language will be placed in a memorandum of offers. It is important that your business complies with securities laws and regulations when raising capital. There was no public or private market for the company`s securities and it is not possible to guarantee that such a market will develop in the near future. There is therefore no guarantee that the securities can be resold in general or close to the offer price.

They must ensure that they purchase such securities for investments and not for the purpose of distribution or resale, that they understand that the securities are not freely transferable and that in any event they must bear indefinitely the economic risk of an investment in the securities, since the securities have not been registered in accordance with the law or the law or national legislation in force. on securities. Securities may only be resold if they are registered retrospectively or if they are exempted from the registration requirement. Of course, the people who have the best insight into what the company needs to worry about are senior management. .