Theatrical Syndication Financing in New York


When offering literature must be filed with the New York Department of Law pursuant to New York securities law and regulations, the following documents must also be submitted:

As discussed in other articles, an offering typically involves the creation of a business organization that will ultimately become the producing entity (the theatrical production company). A limited liability company is often organized as the producing entity because of its flexible management structure, tax advantages, and limitations on personal liability. Regardless of the type of producing entity, pertinent documents relating to the form of the business organization must be included in the filing. For example, certificates of incorporation, bylaws, and any amendments would be included in the filing if the producing entity is a limited liability company.

A specimen of the investment unit being offered must be included unless the investment unit is a copy of the business agreement under which the venture is to operate.

Any agreements with purchasers of advance interests, commonly known as front money, should be included in the filing.

Documents relating to the underwriting, distribution, or sale of interests in the offering (syndication interests) must be included.

The filing must include all of the agreements that the theatrical production company has entered into, including any agreements intended for assignment to or acquisition by the theatrical production company. Examples of the types of agreements that should be provided are as follows: (1) rights agreements; (2) contracts with co-producers, developers, and regional theatres; (3) production contracts with authors and any extensions or modifications to those contracts; (4) contracts with directors, choreographers, actors, press agents, company managers, advertising agencies, costume and scenic designers, suppliers, and theatres.

All agreements pertaining to the disposition of any subsidiary rights must be provided.

A list of all share holders, general partners, limited partners, and joint ventures (as applicable) must be provided no later than 30 days after the total capitalization has been raised. The list must include each investor’s name and address, the amount invested, and the date of the investment.

If the offering is for a theatrical production company that will use the proceeds for more than one specified show or for one or more unspecified shows, the Department of Law must be notified when a production not mentioned in the original filing is produced, developed, or invested in by the theatrical production company. The Department of Law must be advised about the nature of such a production no later than 50 days after initial funds for that production have been expended.

These additional documents will not have to be filed in an offering with waivers. An offering with waivers is more fully described in a separate article. Generally, a small number of potential investors agree to forego their right to receive the offering literature that fully and fairly explains the investment and the risks associated with the investment. When federal securities law applies to the offering, a Form 99 must be filed with the New York Department of Law. The only other document that needs to be filed with the Form 99 is the private placement memorandum (similar to a sales contract); however, the private placement memorandum must fully and fairly disclose the nature of the offering and the risks associated with the investment. Additional information about the Form 99 is provided in a separate article.