Structuring an Offering of Promissory Notes
Sources:-(To be decided by writer. It is a must to cite all sources you use unless otherwise specified in the instructions)
Topic: Structuring an Offering of Promissory Notes
You work at a company called Novus. The company plans to sell promissory notes in order to raise funds for existing business needs. The notes are expected to have a maturity beyond nine months and will therefore fall into one of the specifically enumerated categories of “security” expressed in 33 Act Section 2(1) and 34 Act Section 3(a)(10). In order to avoid the expense of registering securities, the company would like to structure the promissory notes to ensure that they cannot be characterized as “securities.” The Controller of Novus has asked you for guidance on how to accomplish this. Please respond to this request in a memo. Your memo should (1) clearly identify the judicially enumerated types of notes that fall outside the definition of “security,” (2) assess whether any of those categories might be available for a note of the type that Novus is looking to sell; (3) explain the “family resemblance” test articulated by the Reves Court; (4) assess whether any of the test’s four factors might be persuasive one way or another to the Novus offering; and (5) offer any other suggestions you might have regarding how the notes should be structured in order to ensure that the offering raises the necessary funds and yet remains beyond the purview of the federal securities laws.
Solution preview for the order on structuring an Offering of Promissory Notes