Corporate & Securities

Overview & Philosophy

The Firm’s Corporate and Securities Practice Group is comprised of more than 75 professionals and is one of the leading practices in the U.S. focusing on smaller public and private companies and the investment banks and capital sources that focus on this segment of the market. The Firm routinely represents public companies (presently over 80) and their officers, directors and employees in matters related to ongoing compliance with SEC regulatory requirements (i.e., Forms 10-Ks, 10-Qs and 8-Ks). We are proud to represent capital market participants driven by the entrepreneurs who are intent to grow and finance their businesses. The Firm provides legal services for companies in a variety of industries, including life sciences consumer products, social networking, information processing, telecommunications, Internet and software and real estate. Given the Firm’s level of transactional sophistication and our commitment to efficiency, the Firm can often offer “flat fee” arrangements, which we have done for 25 years as a courtesy to clients, which we feel is important to maintain strong attorney-client relationships.

The Firm distinguishes itself from many other transactional law firms on the basis of its ability to be part of the establishment of new alternative securities programs; such as, crowdfunding, registered blind pool offerings (commonly referred to as SPACs), “registered direct”, private investments in public entities (commonly referred to as “PIPEs“) and reverse mergers and alternative public offerings (“Reverse Mergers”), where the Firm’s professionals have played leadership roles within each of those industries – assisting in the creation, formation and strategies relating to those financings, as well as, working closely with the regulatory agencies, including the SEC and FINRA; and listing exchanges such as the NYSE and NASDAQ. The Firm also has many clients whose securities trade over-the-counter. Having cooperated and advised the Pink Sheets on its OTCQX marketplace, the Firm is also proud to be the first law firm ever to be approved as a Designated Advisor for Disclosure (“DAD”) and Principal American Liason (“PAL”).

Public Company Transactions

In our Securities Practice, we act as counsel to more than 80 public companies (including 20 Chinese issuers), as well as, numerous FINRA (formerly NASD) licensed underwriters and placement agents in connection with their financing activities, including private placements and public offerings of equity and debt securities. In 2019, the Firm was ranked top 10 in the U.S. for most actively involved in IPOs of all law firms. The Firm handled 37 IPOs, whose companies raised more than $8 billion. The Firm also retained its #1 ranking in handling PIPEs/RD Financings on behalf of placement agents.  We completed 39 Registered Directs and 13 PIPEs.  In our largest M&A transactions to date as a Firm, in 2018, we represented Forum in the acquisition of ConvergeOne with an enterprise value of $1.3 billion.  The Firm continues to be one of the most recognized firms in the U.S. for our SPAC practice (representing both issuers and underwriters). In 2010, we innovated a new SPAC structure for 57th Street General Acquisition Corp. that is now the accepted convention. Additionally, the Firm is quite active in representing Chinese operating companies interested in going public in the United States, or, have already done so previously. Over the course of the last 15 years, the Firm’s lawyers have participated in excess of:

• 520 SPAC IPOs; including,
• 110 SPACquisitions;
• 860 Registered Directs/PIPEs; and
• 40 Reverse Mergers

We advise issuers on complying with the complex securities laws, rules and regulations that these companies must comply with, including proxy rules, other periodic reporting requirements under the Securities Exchange Act of 1934 (such Forms 10-Q, 10-K and 8-K) and other compliance matters such as Sarbanes-Oxley and other corporate governance matters, insider trading and conflicts of interest.

Law Firm Rankings

Our growth and successes led our Firm to achieve improved rankings among all U.S. law firms. In 2021 and 2020 EGS was ranked #1 in PIPEs/Registered Directs (agent’s counsel). EGS has been one of the most active IPO law firms in the U.S. for the last 5 years.

Click here to view an updated list of Offerings that the Firm has been involved with for your review.

CrowdFunding describes the collective cooperation, attention and trust by people who network and pool their money via the Internet to support efforts initiated by other people or organizations. CrowdFunding occurs for any variety of purposes, from disaster relief to citizen journalism to artists seeking support from fans, to political campaigns, to funding a startup company, movie or small business or creating free software. Crowdfunding for the online sale of securities was signed into law on April 5, 2012 by President Obama, as part of the JOBS Act. Crowdfunding is currently legal with respect to the sale of securities and remains subject to the SEC approving applicable rules, which they are currently drafting.

Ellenoff Grossman & Schole has been heavily involved in the program since its inception. The Firm has sponsored conferences, webinars and has been invited to speak at different events on the topic. Douglas S. Ellenoff, a member of the Firm, has met with the SEC on many occasions to discuss many aspects of the proposed new law, how the industry currently operates and how both the SEC and FINRA will register and regulate funding portals and the crowdfunding activity to be conducted. Additionally, EGS is working with other securities professionals internationally to assist them with their fashioning of appropriate legislation to permit crowdfunding for securities in their jurisdictions.

The Firm is actively engaged with clients (funding portals, broker-dealers, technology solution providers, software developers, investors and entrepreneurs). In cooperation with the industry trade association, the Firm is discussing what level of regulatory review and monitoring is appropriate by the SEC and FINRA in balancing the interests of the program with investor protection. We have several attorneys that have become key players in the program. In particular, our Broker Dealer Regulatory Group, has shepherded many firms through the broker dealer membership process. They have participated on panels with the FINRA Membership Department to develop the New Membership Application Program and will be proactively working with regulators to establish guidelines for funding portals. The Firm has closely followed the legal developments since inception and is actively advising industry members on the proposed regulations. The Firm has written a CrowdFunding Alert that summarizes the key provisions and current status of the new reforms. Click here to read the alert.

Venture Capital

The Firm represents companies at every-stage in the corporate life cycle from incubation, startup, growth, angel and venture financing, to mergr, acquisition, or IPO. In addition to working on financing transactions, we work with our clients to understand their long-term operational goals and develop strategies to realize their business plans. We advice on choice of entity, partner/shareholder agreements, corporate governance, director and officer liability, joint ventures, equity incentive programs and executive and employee compensation. We also counsel clients on financing through the sale of equity or debt in private placement and institutional/venture financing rounds, mergers and acquisitions, foreign subsidiaries, off-shore capital management and a diverse range of commercial transactions.

We remain current on the latest financing structures favored by angels, venture capitalists and private equity firms, and help to lead the evolution of this quickly developing area of law. We are familiar with a wide variety of alternative financing methods, including crowdfunding, and have had great success with finance-through-growth strategies involving early deals with critical strategic partners. Our goal is to help you adopt the best financing strategy, so that you can focus on growing your business.

We develop template agreements and processes for legal workflow and help standardize your confidentiality, assignment of invention, non-competition and other intellectual property related agreements and implement solid employee policies and other compliance documents. We lead negotiations with vendors, banks, landlords, employees, and professional services firms and work efficiently to minimize transaction time and costs. We are business-oriented and counsel industry participants on a day-to-day basis.

Social Impact Investing

Social impact investments are investments into companies, organizations, and funds with the intention to generate more than mere financial returns but also demonstrable social, community and/or environmental impact. Social impact investing occurs across asset classes, for example, private equity/venture capital, debt and fixed income. EGS has a dedicated group of professionals to assist the greater NYC Social Impact Investing community and broader Social Sector Finance industry; representing companies (for-profit, public benefit corporation, not-for-profit, B corporations and hybrids) who are making investments intended to create positive impact beyond financial return, and as such, make a positive social and/or environmental impact through their activities. We advise on a wide range of transactions, including structured finance, fund formation, contracts, banking law, securities law, foreign exchange regulations, local laws and regulations, employment law, tax law and the structuring and governance of not-for-profit organizations. If a matter requires knowledge of a local jurisdiction in which we are not present, we draw on our large network of local counsel in countries around the world.

Over many years of representing entrepreneurs, funds and investment banks in the life sciences industry, the Firm has developed an expertise in working with companies and practitioners in this sector. This includes companies working with pharmaceuticals, biologics, diagnostics and medical devices. The Firm’s long history in representing life sciences companies allows the Firm to help these clients navigate the particular hurdles they face as they seek to offer better treatment and healthcare options for patients and caregivers. The Firm has represented dozens of life science clients and has been involved in hundreds of related financings, mergers and acquisitions, licensing and development agreements and other transactions over the course of the last decade.

Our corporate and securities attorneys (in tandem with experts from the Firm’s intellectual property and other practice areas) regularly advise life sciences companies on the full “life cycle” of key matters they face, including company formation, intellectual property prosecution, acquisition and licensing, strategic alliances and joint ventures, mergers and acquisitions, private and public equity offerings, public and private debt offerings, tax matters and general commercial matters (including contract research organization agreements, manufacturing, supply and distribution agreements, and agreements with universities and foundations).  To assist our clients, the Firm also regularly partners with leading legal and regulatory specialists on matters related to the Food and Drug Administration and similar domestic and overseas regulatory agencies.

Click here to read a presentation on our Life Sciences Practice.

Given the significant disruptions to the public markets and corresponding adjustments to the valuations of public companies and their securities in recent years, managers and investors are increasingly exploring the possibility of taking these entities private, in “going private” transactions. We have experience representing management teams, independent 13D investors, public companies and independent/special committees. In general terms, a going private transaction is the exchange of cash for the shares of a company’s existing public shareholders so that, at the end of the transaction, the company is permitted to terminate its public company status. Forms of going private transactions include (i) mergers of the company with a newly-formed company owned by the manager/control group; (ii) tender offers by the newly-formed company; or (iii) a self-tender by the company for its own shares. A going private transaction typically is initiated by a controlling shareholder or by a group of shareholders that either constitutes a majority or at least a control position in a company. Senior management of the company often comprises such a buyout group, often making going private transactions appear to be management buyouts.

Click here to view a presentation on Going Private in English and Chinese

The Firm regularly advises domestic and offshore clients in connection with contractual matters, including, partnerships, strategic alliances, joint ventures, licenses, executive compensation, employment and consulting agreements, stock option plans and other routine business matters.

EGS provides cannabis-related regulatory, corporate, securities, labor & employment, real estate, litigation and intellectual property advice to this rapidly developing industry.

Our cannabis practice supports entrepreneurs, operators and investors navigating all legal facets of the burgeoning national cannabis industry.  Our team understands the challenges that innovators and visionaries face daily in this space, and we pride ourselves on providing legal guidance and support that understands not just the law, but the operations, culture, and passion of industry operators.  We support our clients by bringing a particular understanding of the realities of this business and the ability to work with our extensive network of industry stakeholders to solve problems small and large.

Our attorneys support individual grow license applicants to multi-state operators on corporate, financing, general counsel support, regulatory, licensing and litigation matters. The main objective is always to understand our clients’ practical and business goals, identify the structural and regulatory challenges in the applicable jurisdiction, and to work to achieve compliant tangible results.  We leverage our firm’s deep bench of knowledgeable corporate, securities, intellectual property, real estate, employment and litigation attorneys to support cannabis industry clients face their individual challenges. We understand that cannabis counseling is not one-size-fits-all and thus provide our clients with adaptability and flexibility to support transactions and needs in a cost-effective, targeted and comprehensive manner.

Corporate Financing and General Counsel Services 

We understand that it is challenging to sell or acquire stock or assets, raise money, enter into joint ventures or strategic partnership or restructure debt in times of financial difficulty.  We know that this is exponentially more difficult for cannabis licensees and operators amidst a climate of interstate commerce bans, restrictions on expense deductions, limited banking opportunities and onerous regulatory restrictions.  When raising money, buying or selling a company or assets, or entering into complex leases or other contracts, our clients need counsel that is experienced and understands the added challenges inherent to the cannabis space.

EGS also provides its clients the ability to serve as a “one stop” outside general counsel, helping wade clients through daily challenges on issues including employee matters, covenant compliance, cap table management, insurance counseling and all facets of corporate governance. Our firm – like the cannabis industry at large – values collaboration and relationships, and utilizes our network throughout the industry nationally to help our clients find the right industry partners to support client needs whenever we cannot. We use flexible fee structures for these services so that our clients do not feel hesitant to give us a call any time they desire to think through legal or business challenges. We pride ourselves on our responsiveness, creativity and strategic problem solving.

Regulatory Counseling and Compliance

We understand that dealing with regulators can be intimidating, particularly with the laws and rules changing rapidly as they are in the cannabis industry. With attorneys who have handled regulatory interface across state and federal agencies in the cannabis space and beyond on a national basis, we stand ready to be our clients’ outward face with regulatory agencies. Our team can also assist clients in helping structure and prepare for regulatory presentations at both the State and local levels. Our attorneys have extensive experience in advocating for our clients’ policy and regulatory goals and are confident in working with regulators on evolving regulations and regulatory interpretations to best represent our clients’ objectives.

Our attorneys also work with clients to ensure regulatory compliance through all stages of cannabis licensure and operations.  Our team’s industry experience allows us to carefully navigate the balance between voluminous regulatory requirements and our clients’ needs to remain compliant without the financial luxury of built-out compliance departments. As such, we provide fractional Chief Compliance Officer functions for cannabis clients, allowing us to bring in our industry knowledge to help clients achieve regulatory success with flexible payment structures.

Licensing 

In today’s climate of new emerging cannabis markets every year, operators need a team of advisors able to wade through the details and machinations of state-by-state regulations and licensing protocols.  Our team has helped clients apply for and successfully obtain cannabis licenses in California, Massachusetts, New Jersey and other jurisdictions throughout the country.

Litigation

Legal cannabis is a new industry and, as such, operators and entrants take constant risks. Among these potential risks, prospective transactions can fall apart, partnerships can become hostile and commercial partners may fail to provide promised products or services, leaving operators in the lurch.  We can help you navigate disputes to achieve your objectives in a timely and cost-effective manner.

EGS offers our clients an integrated, business-minded approach to address your cannabis litigation needs. Our litigators work seamlessly with our cannabis regulatory and corporate teams to craft strategies to achieve the best possible result for you.

As the inter-relationship of the global financial markets becomes more complex, the Firm has participated in several initiatives involving both foreign public issuers also seeking listing on U.S. exchanges and markets, as well as U.S. issuers exploring foreign listings, including on the AIM Market of the London Stock Exchange, the Toronto Stock Exchange and Euronext Amsterdam.

The Firm represents U.S. and international investment advisers, private equity funds, real estate funds, hedge funds, venture capital funds, financial institutions and other pooled investment vehicles in all of their activities, including in connection with:

• formation of a range of investment vehicles, including both onshore and offshore fund structures (master-feeder, parallel vehicles, etc.), to accommodate a wide range of investors, liquidity and tax concerns, and asset classes;
• executing a range of investment strategies, including those involving trading in equities, public and private debt securities, derivatives, real estate (both single asset equity syndications and pooled funds), commercial mortgages, and RMBS and CMBS securities;
• structuring and executing investment transactions, including negotiated public investments in private equity (PIPEs) and registered direct investments in public companies, acquisitions of minority and majority stakes in public and private operating companies throughout the world, funds of funds, and originating and trading in commercial mortgages, investments in real estate and real estate joint ventures;
• negotiating investment management agreements, managed accounts, customized single investor funds, and other direct investment arrangements with clients;
• compliance with SEC, CFTC, NFA, and FINRA regulations and other applicable state and federal laws and related regulatory examinations;
• management company compensation and tax issues;
• negotiation and structuring of credit and liquidity agreements with prime brokers and other lenders; and
• serving as outside general counsel to funds, general partners and management companies.

Our investment management team has a broad range of relevant experience in the field, including sophisticated tax capability. We are cost effective enough to counsel emerging managers and smaller funds, but expert enough to counsel the largest asset managers in the world.

A reverse merger is a transaction where by a private company becomes a public company by generally merging with a public shell company. A shell company is a company that has substantially no assets, except its corporate structure. A company can become a shell company by agreeing to spin off its current assets and liabilities at the time of the merger. Upon the merger, the private company shareholders receive a substantial majority of the shares of the public company (normally 90% to 95% or perhaps more) and the control of the board of directors, resulting in the private company becoming an operating public company. Prior to the merger, the transaction does not go through a review process with the SEC. The transaction involves the private and shell company exchanging information on each other, negotiating the merger terms, and signing a share exchange agreement. At the closing, the public shell company issues a substantial majority of its shares and the board control to the shareholders of the private company.

In these transactions, private businesses merge with operationally inactive public entities, enabling the private business to become publicly-traded on its own, without the need to either identify an underwriter or go through the formal process of an IPO.

The Blockchain, Digital Assets and Non-Fungible Token (NFT) group at EGS offers strategic advice and implementation counsel to address the needs of companies implementing distributed ledger technology (DLT) solutions and creating and deploying digital assets. Such companies face significant challenges implementing these new technologies into the existing legal frameworks that vary from country to country. Many of these issues clash with the manner in which blockchain and other DLT technologies operate.

Here at EGS, we are fortunate to integrate an internal network of attorneys with a vast range of relevant subject matter knowledge (including securities law, IP protection and licensing, commodities future trading regulations, privacy and money transmitter rules) to help our clients take advantage of these new opportunities and achieve their strategic goals through the use of DLT, blockchain, smart contract and other cutting-edge technologies. EGS has a long history of pioneering legal infrastructure to make new technologies legitimate and successful.

Digital Assets are increasingly being recognized by existing U.S. laws, the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to be securities or commodities.

The characterization of a particular digital asset and the resulting legal and regulatory implications is not a function of the underlying blockchain technology utilized.  Instead, it’s based on the economic realities of proposed transactions. The market growth of digital assets amongst investors as a new investment asset class gives rise to distinct regulatory considerations, including the likelihood that the platforms they trade on being deemed broker-dealers under current rules and regulations.

The use of blockchain technologies in effecting digital asset transactions may be, in some instances, quite different than the technologies used for transactions in other asset classes. Certain differences in market infrastructure and trade flow are being evaluated by regulators. In some instances, existing securities laws and regulations applicable to broker-dealers and registered investment advisers may require interpretation, regulatory guidance, or SEC no-action relief in order to support a market for digital asset securities.

EGS’ Digital Assets Practice leverages the Firm’s premier Financial Services and FinTech practices to advise a variety of industry members on their most significant blockchain, digital assets and currencies, and cryptocurrency-related legal and business issues. The multidisciplinary group consists of lawyers across several practice groups at the Firm who collaborate seamlessly to solve our clients most novel issues.

Our clients range from startups seeking to innovate beyond the “traditional” financial industry, to the most highly regulated financial institutions seeking to improve their products and services using new technology, to consumer businesses hoping to integrate innovative technologies into new and better product offerings. Our experience includes regulatory and compliance advice, M&A, capital markets and other transactional matters, development of the legal and contractual framework for new products, corporate structuring and governance guidance, investigations and enforcement matters (including those involving the Securities and Exchange Commission and state enforcement authorities), anti-money laundering and sanctions compliance, intellectual property, and tax structuring advice.

Our team can assist with:

• Smart contract creation
• DAO formation and advice
• Smart contract audits
• Virtual asset valuation
• Advising on interplay of digital and terrestrial assets
• Registering and legally protecting digital assets (including NFT’s, avatars, cryptocurrency)
• Risk mitigation for digital assets
• Helping navigate the legal intricacies of cryptocurrency and blockchain technology
• Regulatory investigations and defense
• Resolving disputes between customers and cryptocurrency exchanges
• Offering highly skilled 3D modeling using many different softwares, including Rhino, Grasshopper, Blender and 3Dsmax
• Providing 3D renderings and virtual tours of Web3 properties
• Parametric 3D models and Generative Design, using coding and algorithms to generate responsive 3D models- automating urban planning and design
• Designing and creating VR experiences, mostly used to immerse a client into its future building or on the metaverse
• Creating NFT collections, built an algorithm capable of setting up thousands of different 3D space configurations, and can build VR experiences from these 3D models
• Designing and building out of any metaverse experience, including buildings, tokens, event venues, and even creation of games
• Full-service wedding and event planning/implementation, including invitations, NFT favors, etc.
• Creating 3D spatial experiences and deploy them into different Metaverse platforms, such as Decentraland, Sandbox and Somnium Space, among others