international business tax-law delaware
Non US company raised equity by issuing shares to non accredited investors,does re-domiciliation to Delaware cause retroactive breach of US laws?
<p>As per the title I would like to know if anybody knows what happens if a foreign non -- U.S. company ( offshore ) raises equity by advertising and soliciting investors included but not limited to people who are not accredited investors per U.S. definition . </p>

<p>Raising equity by issuing shares to non-accredited investors is not a violation in the offshore Jurisdiction as it isn't advertising and soliciting to investors . </p>

<p>My question is : what happens if the aforementioned offshore company re-domiciliates to U.S. , specifically Delaware ? Does re-domiciliation imply a retroactive breach of US laws with regards to said equity raise ?</p>

<p>The question does not provide all of the necessary information.</p>

<p>The sale of securities not registered with the SEC that are issued by a foreign company to a non-accredited investor in the U.S. are a violation of the Securities Act of 1933 which governs public offerings of securities under U.S. law. There are exceptions to this rule, that don't obviously apply in the circumstances describe by the original post, but the mere fact that the issuer is not organized or based in the U.S. does not mean that it is exempt from the '33 Act.</p>

<p>On the other hand, if the non-accredited investors of the foreign issuer were all non-U.S. persons, there would be no securities fraud violations under U.S. law or the law of any U.S. state when the securities were issued.</p>

<blockquote>
  <p>what happens if the aforementioned offshore company re-domiciliates to
  U.S., specifically Delaware? Does re-domiciliation imply a
  retroactive breach of US laws with regards to said equity raise?</p>
</blockquote>

<p>The re-incorporation of the foreign issuer in the State of Delaware in the United States would not be a retroactive violation of the Securities Act of 1933, which governs public offerings of securities in the United States, because a change in a corporation's place of organization does not constitute a public offering under the '33 Act.</p>

<p>But, as noted above, if the foreign issuer of the securities sold securities to U.S. investors prior to the relocation and without registering the sale with the U.S. Securities and Exchange Commission, those sales could have been '33 Act violations in the first instance, despite the fact that it was a foreign issuer. And, re-incorporation of the foreign issuer in Delaware might very well bring the company's previous '33 Act violations, if any, to the attention of the SEC even if the SEC had not previously been aware of those violations.</p>

<p>But, upon relocation to Delaware, the formerly foreign issuer would, going forward, be subject to the Securities Exchange Act of 1934. This act requires companies that are listed on a U.S. stock exchange, or are organized in the U.S. with <a href="https://www.sec.gov/answers/about-lawsshtml.html" rel="nofollow noreferrer">more than $10 million in assets whose securities are held by more than 500 owners</a> to file annual and other periodic reports, and to comply with other regulatory requirements applicable only to publicly held companies. </p>
