Prompt Letters and Fair Fees Help Shareholders, Brokers and Issuers
The Logan Law Firm PLC Solution
Logan Law Firm PLC provides many services and benefits to shareholders of restricted securities, including offshore sellers of restricted stock. Logan Law Firm assists securities brokers, stock transfer agents and microcap public companies with questions that they have about unusual situations:
Important Services for Shareholders and Their Brokers/Banks
- Assessment of the Availability of an Exemption to Sell the Shares. Unless restricted stock has been registered for resale in the public markets in a current, effective registration statement (such as an S-1 or S-8 registration statement), the shares can only be sold if there is an available exemption under the federal securities laws. Logan Law Firm will advise shareholders if there is an available exemption and if the public company that issued the shares meets all requirements for the shareholder to use the safe harbor under Rule 144. More details about Rule 144 are available on the Shareholder Information page. When the Rule 144 safe harbor is not available, we will advise the shareholder if there is another way to meet requirements of Section 4(a)(1). If the shareholder paid for the shares at least two (2) years ago and current public information is available for the public company, a resale of the shares may still be possible. If the holding period is less than two (2) years but the shareholder has a serious financial emergency, a resale may be possible.
- Prompt Opinion Letter. If shareholder is eligible to receive a Rule 144 opinion letter, it will almost always be prepared, signed and issued by Logan Law Firm PLC within one business day of receipt of the required (a) information, (b) faxed documents and (c) payment or confirmation of payment arrangements. Opinion letters are often issued the same day that the information, documents and payment confirmation are received.
- Reasonable Fees. A fee of $425.00 is charged for basic Rule 144 opinion letters. An example of an opinion that can usually be issued for this fee would be a single purchase of common stock in a private placement where the shareholder has all of the documents related to the transaction, including proof of payment, a copy of the subscription agreement signed by both the company and the shareholder, copies of the front and back of the stock certificate and other documents associated with the purchase. The service includes:
- Analyzing the information and documents provided by the broker, the issuer and the issuer’s stock transfer agent regarding the circumstances of the Shareholder,
- Writing the Rule 144 opinion letter, and
- Coordinating the clearance of the Rule 144 legend from the shares with the shareholder, the shareholder’s broker-dealer or bank, the issuer and the issuer’s stock transfer agent.
- Payment Options. The attorneys’ fees and any charges for overnight delivery of the original opinion letter are the responsibility of the shareholder. The bank or broker-dealer requesting the opinion for the shareholder is not responsible for the attorneys’ fees or delivery charges. The shareholder may pay our fee by mailing a check, by providing credit or debit card information to us over the telephone or by wire transfer of funds. Please see Payment Options for more details.
- Distribution of Opinion Letter. The opinion letter will be sent to the shareholder, the broker-dealer and the issuer of the securities by e-mail and, if requested, either by first class mail or overnight delivery. After determining that all documents are in order and that the shareholder may sell the shares in compliance with the federal securities laws, the broker-dealer will then send a compliance package (the legal opinion and its attachments, the original stock certificate(s) and stock power(s), a letter of instruction regarding the actions that should be taken by the stock transfer agent, payment for the stock transfer agent’s fees and related documents) to the issuer’s stock transfer agent.
- Special problems faced by owners of Regulation S securities. Regulation S is an exemption under the Securities Act of 1933. Regulation S provides a simplified process for raising capital offshore. Resales of those shares are subject to Section 4(a)(1) and Rule 144. Few offshore investors have an existing relationship with a United States securities attorney. Therefore, many owners of Regulation S securities face hurdles when it comes time to sell Regulation S shares such as:
- Finding an experienced attorney in another country, especially one who is eager to assist a bank or broker who may not be highly experienced with sales of restricted stock
- Communicating with an attorney in the United States (where the work days of the shareholder and the attorney may not overlap.
- Logan Law Firm PLC resolves these Regulation S issues by being available to offshore banks and shareholders during their local business hours, having experience with offshore capital raises utilizing the Regulation S exemption, having experience helping shareholders, bankers and brokers who are new to the process of clearing restricted securities and having experience assisting persons whose first language is not English. Logan Law firm has issued hundreds of opinion letters for offshore shareholders.
Advantages to Broker
- Fast service. Prompt opinion letters accelerate the clearing of transactions, the availability of sale proceeds and the payment of commissions. Logan Law Firm PLC, will issue the Rule 144 opinion letter within one business day (and often the same day) of our receipt of the required information, documents and payment.
- Immediate Access for Help. Contact us by email through the “Contact Us” portal on each page or by calling +1 602 957 9320, Ext. 1. We answer the phone from 7:00 a.m. Mountain Standard Time until 8:00 p.m. Mountain Standard Time. Note: Arizona does not change its clocks when other locations switch to daylight savings time or summer time. We are on the same time as Los Angeles when daylight savings time is in effect and one hour later than Los Angeles otherwise.
- Website Links and Contact Information for Broker-Dealers Seeking New Customers with Restricted Stock. Logan Law Firm PLC can add a website link and contact information for other brokers that welcome new accounts for holders of microcap and smallcap restricted securities.
- Customer Retention. Brokers may lose first-time customers who may unfairly blame the broker for delays associated with obtaining restricted securities opinion letters. Our prompt processing of opinion letters and willingness to explain the process to shareholders helps the broker to manage these issues.
Help For Issuers
- Reduced Overhead. Phone calls and letters from shareholders, brokers, attorneys and the stock transfer agent regarding proposed sales of the issuer’s restricted securities can be greatly reduced in number and become much more efficient.
- Logan Law Firm is a Resource Regarding How to Document the Issuance of Restricted Stock. Because statutes, rules, regulations and their interpretations change so often, it is difficult for a small issuer to understand what is needed by shareholders when they seek to sell their restricted stock in the public markets or in private sales. We are a resource for the issuers regarding the type and content of documents connected with the issuance of restricted stock in return for many types of consideration. We know what FINRA looks for when auditing broker-dealers. We know what compliance officers of broker-dealers and their clearing firms require. We can assist issuers to develop proper documents regarding private placements, employee stock plans, shares issued to creditors in payment of business expenses, consulting compensation, etc. We can examine and make suggestions about the forms of corporate actions involving approval by the Board of Directors of consulting agreements, employment agreements, loan agreements, debentures and preferred stock issuances (and the terms of those documents) as well as communications with the issuer’s stock transfer agent. We prefer to provide these services with the knowledge of and in cooperation with outside counsel for the issuer. We do not seek nor are we qualified to provide a broad range of securities law representation of an issuer.
- Benefits of Outsourcing. Outsourcing the task of issuing Rule 144 opinion letters to Logan Law Firm eliminates the risk (however slight) that issuer’s current outside legal counsel could be disqualified from representing the issuer in a future dispute with one or more shareholders, especially those who are affiliates of the issuer.
Issuer’s Outside Securities Counsel
- Elimination of Troublesome Tasks. Writing Rule 144 opinion letters for shareholders is an unwelcome (and often unprofitable) task for many outside legal counsel for issuers. The shareholder is often eager to have the attorney act immediately, while the attorney is attempting to manage many significant projects. Few shareholders understand the 24 x 7 pressures of a busy securities lawyer and fewer have patience with unavoidable delays. We are able to give immediate attention to these frequently small projects and also have the experience to assist shareholders with very complex restricted securities issues that many securities attorneys seldom encounter.
- Elimination of Potential Disagreements. The issuer may not only remove an item from its legal budget, but also will eliminate a potential source of conflict between house counsel and outside counsel about the reasonableness of the fees charged for Rule 144 opinion letters. The issuer may be concerned about the amount of the fees, if for no other reason than because the expense does not result in a direct benefit to the issuer. Each shareholder would bear the modest expense of obtaining an opinion letter from Logan Law Firm.
- Eliminate Risk of Disqualification Because of a Conflict of Interest. Referring Rule 144 opinions and other restricted securities opinions to our firm eliminates any slight risk that issuer’s legal counsel could be disqualified from representing the issuer in a future dispute with shareholder because issuer’s counsel has done legal work for both parties related to the securities owned by the shareholder.
- Your Core Business is Not Our Practice Area. Logan Law Firm PLC does not prepare or review registration statements, Form 10-K’s, Form 10-Q’s, private placement documentation or filings related to public offerings. We assist public companies with restricted securities issues, update corporate minutes and assist with drafting consulting and employment agreements. The firm prepares resolutions and minutes related to the approval of employment and consulting agreements and the issuance of stock as compensation. We consult with public and private companies regarding their disputes with consultants, employees, officers and directors, but we do not appear as counsel of record in court. We have prepared investor presentations (including PowerPoints), analyst reports and business plans for more than 100 public and private companies. We prefer to coordinate our work with the issuer’s current attorneys.
Benefits to Stock Transfer Agent
- Fewer Shareholder Problems. There should be fewer calls by issuers, brokers and shareholders because Logan Law Firm will provide them with information and guidance about the Rule 144 process, including what will be required by the stock transfer agent and why the stock transfer agent must follow certain procedures. Our assistance should reduce the need for shareholders to contact the transfer agent with basic questions.