Business Law Essay
Langley Brothers, Inc., a corporation incorporated and doing business in Kansas, decides to sell no par common stock worth $1 million to the public. The stock will be sold only within the state of Kansas. Joseph Langley, the chairman of the board, says the offering need not be registered with the Securities and Exchange Commission. His brother, Harry, disagrees. Who is right? Explain.
In responding to the question be sure to:
• Discuss the exempt securities pursuant to the Securities and Exchange Act.
• Determine whether or not Langley Brothers would be subject to registration requirements.
Joseph Langley, chairman of the board for Langley Brothers, Inc is incorrect to say that offering the stocks do …show more content…
4. This section is available only to the issuer of the securities. Affiliates of the issuer may not use this section to offer or sell securities. This section also does not cover resale of securities by any person. This section provides an exemption only for the transactions in which the securities are offered or sold by the issuer, not for the securities themselves.
5. The purpose of this section is to provide an exemption from the registration requirements of the Act for securities issued in compensatory circumstances. This section is not available for plans or schemes to circumvent this purpose, such as to raise capital. This section also is not available to exempt any transaction that is in technical compliance with this section but is part of a plan or scheme to evade the registration provisions of the Act. In any of these cases, registration under the Act is required unless another exemption is available.
Based on the exemptions that were listed above Langley Brothers would be subject to the registration requirements, meaning the stocks need to be registered with the Security and Exchange Commission. The Securities and Exchange Commission is comprised of four basic divisions. The Division of Corporate Finance is in charge of making sure