Legal Question in Securities Law in Illinois

Re: Illinois Securities Act

If the person signed a preorganization subscription agreement prior to the incorporation, organization or formation of the business, the issuance of the stock is exempt under Section 4.M of the Illinois Security Act, but only if:

(A) the number of subscribers does not exceed 25 and

(B) either (1) no commission is paid in connection with the sale , or (2) if a commission is paid, the securities are not offered or sold "by any means of general advertising or general solicitation."

I assume that when you say "before the company began" you mean the same thing as when the statute says "prior to the incorporation, organization or formation of the business", but when someone talks about when "the company began" they could mean something other than the statutory definition.

I hope this helps.

David K. Staub, an Illinois business and tax attorney