How can a Startup use equity to pay for work outsourced to a different country?
How do startup companies in US pay for work done in India with equity. If the startup company is incorporate in the US and it wants to pay a company in India to develop a product through equity - how can this be done? What are the legal paper works that need to be filled?
- 1 decade agoFavorite Answer
Unless youve already taken your company public through a score offering or pink sheets, I wouldnt do that. If you pay with stock they would have voting rights to your company which would mean you would have to have regular corp board meetings at which they would have a say. Forget the international issues. Unless you have had audited financials and legally taken your company public (by the nature of your question I assume you havnt) your corporation is currently exempt from SEC registration under Reg D 504 or 505. Personally, I wouldnt give or sell stock to anyone whom is not in a managment position at your firm unless they are an accredited investor. Startup is a bear, but if you cant make that deal with someone in the US that you would give some say in the management of your firm - its not a good idea. I posted links to the relavent SEC forms below. If I can help you any further feel free to contact me.
Ronnie SpringerSource(s): http://www.sec.gov/answers/regd.htm Reg D SEC http://www.sec.gov/answers/accred.htm accredited investor