GLBSE IPO for a LLC

[bels]

Hello,

Does anyone know of an actual registered US company (LLC, LLP, Corp, etc...) that used GLBSE for an IPO.  I am thinking of putting out an IPO for my LLC on GLBSE and have sought the help of local lawyers and they have not been able to help mainly because they don't understand the whole bitcoin environment.  I have seen many discussions on these forums about the legal implications of IPOing on GLBSE but there are many conflicting opinions on the matter and most of the insights don't pertain to an actual registered company.  I know in the US the JOBs Act came out recently that made things like Kickstarter more on the up and up and I don't know if IPOing on GLBSE falls under the JOBs Act.

If anyone knows of any US lawyers that actually understands what bitcoins are and the GLBSE are I would love to get their contact info.  And before anyone asks why I would be looking at doing an IPO on GLBSE the reasons are simple.  I like how little BS/paperwork is involved with GLBSE versus things like the NYSE/Pink Sheets/etc...  I would rather spend time working on growing my business than hours/days/months on paperwork just to get listed on an exchange.

I look forward to see what the bitcoin community has to say about this.

Thanks.

[DeathAndTaxes]

IMHO generally a bad idea.

1) US Securities Law.
It would be a violation of securities law in the US.  The Job ACT hasn't been implemented and even when it is implemented there are significant restrictions.  The biggest restriction is the site offering equity must be a broker dealer and CAN'T allow trading of equity.  While in theory it is possible for an broker to offer equity in startups priced in BTC, GBLSE as it exists right now would not be able to get a broker dealer license in the US.  The idea of a licensed kickstarter platform is a pretty cool concept though but that is a different topic.

Outside of kickstarter proposal, the simple (and consult your own legal counsel) version is that as a non-public company you are prohibited from soliciting investment from non-qualified investors.  Now the reality is if you found an investor on this forum, hashed out a deal, and offered him x membership units for $y or y BTC you probably would still be technically in violation of the law but nobody is going to be "coming after you".  It is kinda a gray area where the line between acquiring a partner and solicitation the public for investment is drawn.  On the other hand offering 10,000 shares to hundreds of people on an exchange can't be viewed as anything but a solicitation for investment.  Also LLC can't offer shares.  There are legal differences between shares of a corporation and LLC membership units (sometimes just called units).

2) Taxes.  
Your LLC a legal entity registered with the state.  Unless you plan on engaging in tax evasion for the rest of your life at some point when you post a profit you are going to have taxes due.  Depending on how your multi-member LLC is taxed (partnership, S-Corp, C-Corp) some or all of that tax liability will pass through to members. The LLC is legally responsible for reporting on the profits of its members.   How are you going to do that if you don't even know who owns your LLC?

3) LLC protection.
An LLC is only an LLC because the state says it is.  You should have an operating agreement and that operating agreement specifies the conditions under which a new member can be added.  Violating your own operating agreement is grounds for nullification.  That means the courts rule the LLC never existed and any liability protection or tax advantages disapear overnight.  You could find yourself personally liable for the LLC debts, or facing masive tax bills.  Don't risk nullification of your LLC for ANYTHING.

4) Future complications.  
Someday you may be approached by venture capitalists (traditionally before going public and being a traded company).  Any liabilities you have incurred on GBLSE are almost guaranteed to make VC nervous. VC aren't interested into pushing the boundaries on new law or dealing with companies where the legal or ownership structure is in question.  They are already taking a huge risk simply investing in a startup.  Say you become massively profitable only to have some GBLSE "shareholders" file a lawsuit saying they actually own x% of the company and the VC (and you) see your share dilluted.  You don't want that, VC don't want that.  Keep the ownership and legal structure of your company on solid ground.

[bels]

Thanks for your insight.  You brought up some points I did not think about.  It's a damn shame GLBSE can't be used for this type of thing.  Oh well.

[Stephen Gornick]

IMHO generally a bad idea.

You hadn't added a link to your discussion on an alternate approach, so I'm adding to this thread here:
   
I think I may have found a solution for "real world" companies and GLBSE.

 - http://bitcointalk.org/index.php?topic=110042.0

why I would be looking at doing an IPO on GLBSE the reasons are simple.  I like how little BS/paperwork is involved with GLBSE versus things like the NYSE/Pink Sheets/etc...  I would rather spend time working on growing my business than hours/days/months on paperwork just to get listed on an exchange.

Because crowdfunding rules in the U.S. haven't even been finalized or published, the requirements to do an equity crowdfunding IPO aren't even known yet.


Generally to crowdfund you'll want to use a crowdfunding platform -- perhaps one that might already have an investor following that is familiar with your industry.  But even though things won't start popping until early 2013, you could start vetting platforms now.

One thing you might consider is to put a bug in the ear of one of those local lawyers interested in learning about crowdfunding.  Perhaps suggesting the upcoming crowdfunding bootcamp would be something of interest:
 - http://crowdfundingroadmap.com/bootcamp

Good sources of news and updates of the crowdfunding industry:
 - http://www.CrowdSourcing.org
 - http://twitter.com/bitcoinmoney/crowdfunding