A blank check company, also commonly referred to as a blind pool stock offering or special purpose acquisition company (SPAC) is a public company that has no established business. It is a shell company. They are often used to gather funds to acquire or merge with another company which is usually a private company. Blank check companies are regulated by the Securities and Exchange Commission (SEC) Rule 419. Special purpose acquisition companies are a type of blank check company.

The SEC usually considers blank check companies to be penny stocks or microcap stocks which subjects them to certain regulations and prohibits them from using Rule 504.

Anyone intending to form a blank check company or special purpose acquisition company should consult with experienced legal counsel.

 

Blue Sky Laws

Blue Sky Laws are state laws that require registration of securities and prohibit fraud to protect investors from speculative schemes and fraudulent investment practices. Unlike federal laws which apply nationwide, blue sky laws are specific to each state, having different requirements. Some exemptions may apply.

 

Nano Cap Stocks

Nano cap stocks refer to publicly traded stocks with a market capitalization of $50 million or less. They are the smallest stocks by market cap and are often referred to as penny stocks although a nano cap stock does not have to be a penny stock. They are smaller than small cap stocks.

 

Penny Stocks

Penny stocks refer to stocks of publicly traded stocks that trade for less than $5 per share. While some penny stocks trade on major stock exchanges such as the New York Stock Exchange (NYSE), most trade over the counter through the OTC Bulletin Board (OTCBB).

 

Loan Stock

Loan stock refers to common or preferred stock that is used as collateral to secure a loan from a financial institution or other party. The loan can be based upon either a fixed or adjustable interest rate. Lenders usually maintain physical control of the stock until the loan is repaid.

 

Securities and Securitization

Direct Listings - Direct Public Offerings

Restricted Corporate Stock

Unregistered Securities - Stock

Offering Memorandum/Prospectus

Shelf Corporations - Shell Companies

Unquoted Public Companies - Unlisted Public Companies