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Elio:
If you read the 1933 Securities Act and all of its updates, like the Securities Improvement Act of 1996, you find the following: a company cannot issue itself shares and then sell them. Anytime a company issues shares to itself the shares must be registered with the SEC and a filing is required to do that. The company would need to file an SB 10 to register shares and that would make it a reporting company.
The only way to issue free trading shares is for the company to do a 504 D private placement. Shares issued in a 504 D are, according to the 1933 Act, free trading shares. The company could also do a 505 or 506 private placement under the 1933 Act, but those shares are restricted under Rule 144 for a year. The company could do a Regulation S deal, but those shares would also be restricted for a year.
504 D deals are limited to raising a million dollars a year. The window is a continually floating twelve month period starting from the time a company hits a million. So if you started raising $ in April and hit the million mark in July, you cannot raise any more 504 money until the following July.
Offerings done under 504, 505 and 506 need to be registered with the SEC and with State regulatory agencies where investors are located. So if I bought into a 504, the company would need to file with the SEC and with the state of New Mexico's security regulations division. If somebody else in New York bought into the same 504 the company would also have to file the deal with New York regulators, and so on. You could check with the larger states to see if a 504 was ever registered there: you know, Texas, New York, California, Florida, Illinois.
The company can issue shares to employees without a registration process, but then the shares are restricted for a year. Companies cannot issue free trading shares to pay debts without registering the shares.
Hope this helps.
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