For Private Placement and other Transactions
Prospectus LLC Can Serve as your Trusted Escrow Agent
Here at Prospectus LLC, our attorneys can help with any aspect of your escrow service obligations. We can organize an account in mere hours, and just as quickly we can have your business ready to receive any subscriptions.
Escrow services are usually utilized to hold funds for private placement offerings taking place between multiple parties. We can establish an escrow account to hold capital from an investor, which will subsequently be delivered to the specified company when some sort of contractual obligation has been met.
Why Use Escrow
An escrow account is a safe way for two parties to execute any sort of transaction. An offering document for a private placement may include a section with escrow clauses. If your offering document does not include a section for escrow, we can readjust it to include any escrow information that you want to disclose.
Private Placements and Subscriptions
Before the capital in an escrow account can be released to the certified recipient, specific requirements must be met. Probably the most utilized escrow clause for private placement is the maximum capital that a company is trying to raise for expansion purposes. As an example, take a company that wants to raise $5 million. If they can’t operate their company with any lesser amount, an escrow account will be established to hold the funds until $5 million is raised. These accounts are established to protect the investor. If an investor put up $1 million dollars, and the company could access that capital right away, the investor would be taking a huge risk, especially because the company stated that they could not effectively move forward with any investment until that minimum $5 million was raised. As a result, in a private offering, all funds raised would be placed in an escrow account until the full specified amount of capital is raised. This amount is referred to as the minimum offering.
Holding Escrow Proceeds until the Minimum Offering is Subscribed
A well written offering document will state that any capital raised up to the minimum offering will be placed in an escrow account, and that this capital will not be accessible until that amount is met. When the minimum offering is met, the escrow agent will release the funds to the company that has issued the securities. If this amount is not reached in a certain amount of time, all that capital will be restored to the respective investors. Escrow clauses have to be disclosed in the offering document. If you feel like you need help implementing this information into your prospectus or PPM, please feel free to contact us or sign up for a free consultation.
Here are some Reasons to use Prospectus LLC’s staff for your Private Placement Escrow:
- We will manage an escrow account that will follow standard procedure. We will not release any funds until all the pre-determined obligations of the transaction have been met.
- Our team is an unbiased and uninterested party who has no right to any of the capital that is being raised. All we do is manage the escrow account.
- Prospectus LLC’s team of attorneys can draft your escrow clauses for implementation into your offering document.
- The escrow agreement imposes the duties of a legal trustee on the escrow agent.
- Prospectus LLC’s attorneys will act as your escrow agent, and they will handle all your arrangements in a fast and effective manner.
- We abide by the contractual, fiduciary, and legal obligations to guard any capital or financial instruments that are held in an escrow account.
Prospectus LLC’s Escrow Services Sample
Our attorneys and staff can hold and transfer your shares or stock or units to the investors.
Step 1: The seller or issuer of the securities will deliver copies of the original certificate of ownership, such as share or unit or stock certificates, to the escrow agent or if decided to be undertaken electronically via a clearing system;
Step 2: The purchaser of the securities will wire transfer the subscription price into the escrow account. The escrow account will be specifically created for this type of transfer;
Step 3: The seller of securities will deliver the original certificates of ownership or if agreed via electronically, often to the escrow agent, Prospectus LLC in this case;
Step 4: The escrow agent will deliver the certificates (physical or electronic) to the subscriber of the securities, once all conditions of the escrow agreement have been met.
Our Team Can Help
Prospectus LLC’s team can handle all of your escrow needs, and we can even act as your escrow agent if need be. We can draft your entire offering document, or we can simply edit your existing one to implement escrow clauses. We can write the escrow agreement, or we can simply manage your escrow account. No matter what you may need with regard to escrow services, we can assist.
If you have any questions, please contact us.
- Prospectus Writing
- IPO Stock Exchange Listing
- Bond Offerings
- Feasibility Study
- Hedge Funds and Mutual Funds
- Offering Memorandum
- Private Placement Memorandum
- Offering Circular
- Explanatory Memorandum
- Information Memorandum
- Fund Setup Formation
- Securities Identifiers
- Registration and Filing
- Legal Work
- Escrow Services
- Business Plans