Legal question for all of you forum lawyers...

If you are set up as a company, you can always issue a second class of shares. Usually your company articles would allow you to issue a class "B" shares where you can stipulate that the holders of those class "B" shares do not have voting rights, but entitled to dividends of the company.

You can also set the venture up as a unit trust. A unit trust operates like a company (a live example would be like an ETF) and you can also have class "B" units where the holders don't have any voting rights.

Another thing you can do is offer your investors a "deferred purchase" scheme where they put in say 10% upfront and then when the business hits (say) $100k in profits, then you can "call up" the second 10% of their purchase price (or have the profits fund their second instalment payment etc). This way their purchase price is self funding and their risks are minimized. Further this may be a better sell to your investors as they are essentially using the profits that they are getting to buy into a business.

Actually, the general structures you use for a business venture is pretty much the same across most English speaking jurisdictions and even across most developed and developing world. This is because historically they all stem from the same place of origin (England).

Sure the day to day admistrative aspects and terminologies may be different - and there may be difference treatment of the structure for tax purposes, but because most businesses transact across different countries, companies and unit trusts are common and are mostly governed with simliar rules.

I am not speculating either. In my previous life I worked in mergers and acquisitions and venture capital funding in a top tier law firm, I have set up companies in Cayman Island, unit trusts hedge funds in Hong Kong and bought and sold corporations in Europe.

Disclaimer: This in no way constitutes legal advice. If, hypothetically, i was a corporate lawyer who did a lot of venture capital work for emerging companies, here might be my thoughts:

(1) If I was one investors, and the investment was sizable (obviously that depends on the person), I would definitely require some sort of company (whether corporate, llc, or partnership) to protect my investment.

(2) It really is easy to set up an corporation or LLC. As someone else recommended, you could issue a one class of securities (or "membership interests" in the case of the LLC) to you, and another class of securities to the others (without voting rights). I think this would be ideal situation. If you were only to issue one class, you would want to keep 51% (actually 50.000001%) ownership yourself to prevent control issues. You could have some sort of stockholders agreement that might allow to get away with a pure 50/50 split with a single class, but I just don't think the added headaches would be worth it. You want it to be *your* company.

These days, many situations just like yours are done in the form of LLCs with two different types of members. Members type A are what you could consider the owners, and Members type B get some sort of payout, whether it be a revshare, lumpsup upon meeting certain milestones, or what not. It really isn't that hard to draft up, hypothetically.

(3) In the U.S., the genreael rule is that you are not allowed to issue shares of stock (this would include llc interests) unless such shares are registered with the SEC. There are many exceptions, the most common ones are under Regulation D (also known as "Reg D offerings").

Reg D is composed of Rule 504, 505 and 506 exemptions. Each one has different variables. Things they look at are offering size and types of investors (whether they are "accredited investors", which basically just means they either make a lot of money each year or they have a high level of net worth).

The key were is that you are not allowed to make public solicitation or advertising to get investors. This is a big non-no by the SEC. You can chat with people etc., but don't be putting up postings, articles, etc. looking for investors. You can certainly approach people invididually. The second key item is that the investors who get the shares, are subject to these same restrictions. Assuming you don't plan on raising more than $1,000,000 USD, you would likely qualify as a Rule 504 exemption.

Note that there is a federal filing for Reg D filings, and a state filing in each state where an investor or your company is located/incorporated/formed.

If you have any specifics you can PM me.