In today's uncertain economic environment, raise funds , requiring listed companies to go beyond the methods used in the past . Private investment in public equity (PIPE) transaction or fully underwritten products at the best of times can be costly and time consuming.
As the Placing Shares PIPE transaction is not registered , the registration form must be resold in the United States Securities and Exchange Commission (SEC) filed and declared effective by the trading of the shares in the open market free circulation . PIPE transactions usually require investors a heavy discount to the current share price the issuer and may guarantee insurance to cover the risk of illiquidity . In addition , PIPE transaction terms may include fines or liquidated damages provisions if the issuer fails within the specified time to obtain a valid registration statement .
Underwriting or secondary offering of shares may be very time-consuming and expensive , need to submit a registration statement with the SEC and the accompanying prospectus and the related legal and underwriting fees . The shares may not be the price or placed until the U.S. Securities and Exchange Commission a registration statement declared effective , depending on the U.S. Securities and Exchange Commission review process and any related follow-up comments need to be addressed , it takes time, a commodity , many smaller public companies can not afford.
Register direct issue to the public companies seeking capital provides another such choice, and offers many benefits, but , RDO is not without its shortcomings.
What is a registered direct offering ?
Registered direct offering (RDO) is similar to the PIPE transaction , sales and marketing of a limited number of accredited and institutional investors , however , unlike a pipe, an RDO sale of share registration, therefore , the liquid can be sold to anyone. In order to complete an RDO, the issuer must be eligible to use Form S-3 and should have an effective shelf registration statement on the U.S. Securities and Exchange Commission (SEC) documents. If the issuer is eligible to form S-3 , but did not have an effective shelf registration statement on file , the issuer must file a registration statement purposes ( ie, "bullet" ) , covering " RDO " shares to be issued , or shelf registration statement .
Placing Agent Agreement, the underwriting agreement, rather than a , RDO transaction subject . Agreement with the Placing Agent to provide the "best efforts " basis for sale, so no firm commitment to provide a specific number of shares placed, the Placing Agent has never hold any securities. Placement Agency Agreement generally include the issuer's representations and warranties about itself and its business , the applicable Issuer, any securities of the Placing Agents ' Compensation Act transactions arising from certain debt covenants and closing conditions , such as legal advice , comfort letter required to deliver a certificate , and so on.
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