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Re: Forming a Company with International Investors

From: Roman Fichman E.
Sent on: Monday, January 14, 2013 5:24 PM
As always crowd sourced wisdom is spot on.

To recap and focus:
- Generally there are no significant securities issues with foreign investors investing in US companies (especially if they approached you). However you still have to treat them as you would any US investor and not make any performance promises etc.
- Though investors may qualify for an EB5 investor visa, which could lead to a 'green card', many foreign investors don't want a 'green card' because it could obligate them to pay taxes in the US. They will most likely, however, be required to at least file an informational tax return in the US.
- the company cannot be an S corp
- one important issue is the source of foreign funds. Under various foreign corruption and money laundering acts, a significant criminal liability is placed on individuals and entities accepting tainted foreign funds. I've seen a number of cases where innocent folks got caught up. This means that you would need to do due diligence on the investors. Another helpful point is to use large international banks.
- some additional limitations apply but likely not in the case of a typical startup (investors from certain countries are precluded, foreign investments in certain technology and strategic industries are regulated)

>>Hello NYTM. Happy New year to everyone. I have some questions about forming a company and accepting investment. Here is the good situation to be in: My partners's family overseas wants to invest in our company. What are the different things we could offer them? One idea was to give them a percentage stock of the company. Then as my partner and I make profit we would buy back shares. Also what issues will we find when accepting investment from an overseas investor?  Has anyone been in this situation before? I would love to hear any stories you may have out of your experiences forming companies and accepting investments. Advice?

Roman R. Fichman, Esq.  │ @TheLegalist
(212) 337 - 9837 Tel
(212) 842 - 5311 Fax

Start-Ups * Technology, Internet & New Media * IP & Business Law * Funding * M & A * Due Diligence

Disclaimer: This post has been written for educational purposes only and was not meant to be legal advice and should not be construed as legal advice or be relied upon. No intention exists to create an attorney-client relationship or any other special relationship or privilege through this post. The post may contain errors, inaccuracies and/or omissions. You should always consult an attorney admitted to practice in your jurisdiction for specific advice. This post may be deemed as Attorney Advertising

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