FINANCING OF INDEPENDENT FILMS: PRODUCTION COMPANY BUSINESS FORMATION & FINANCING BASICS

IN THIS VIDEO WE DISCUSS, THE FINANCING OF INDEPENDENT FILMS: PRODUCTION COMPANY BUSINESS FORMATION & FINANCING BASICS #LAWFIRM
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DISCLAIMER: NOT LEGAL ADVICE. FOR INFORMATIONAL PURPOSES.
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* Disclaimer: For educational or informational purposes only. Not intended to be business, tax, accounting, legal, or other professional advice.
FINANCING OF INDEPENDENT FILMS: OVERVIEW OF PRODUCTION COMPANY BUSINESS FORMATION AND FINANCING BASICS
Hi everyone, my name is Justin Sterling. I am an Attorney and Founder of The Sterling Firm. We are answering the question: How to form an independent film production company?
WHAT IS AN INDEPENDENT FILM PRODUCTION COMPANY
BUSINESS FORMS
I. SOLE PROPRIETORSHIP
II. PARTNERSHIP
III. CORPORATION
IV. LIMITED LIABILITY COMPANY (LLC)
When choosing the proper business structure, there are four main areas of concern:
(1) Control - The filmmaker’s creative control of the project;
(2) Financing - Financing capabilities and funding of the production company and the individual film projects;
(3) Liability - Exposure for contractual obligations and tort liability (which is the duty to pay compensation for accidents or intentional misconduct); and
(4) Taxes - Federal and State tax obligations owed and whether the tax can be shifted to the company or its owners.
INDEPENDENT FILM PRODUCTION FINANCING
DEBT FINANCING
EQUITY FINANCING
THE DISTINCTION BETWEEN ACTIVE INVESTORS AND PASSIVE INVESTORS
SECURITY LAWS
The United States Securities and Exchange Commission defines a security very broadly as: "Any note, stock, treasury stock, bond, debenture, certificate of interest or participation in any profit-sharing agreement…, any collateral trust certificate, preorganization certificate or subscription, transferable share, investment contract…"
Moreover, pursuant to the Howey Test created by the United States Supreme Court in 1946, an investment contract is subject to security laws if it contains the following elements:
(1) An investment of money in a common enterprise;
(2) An expectation of profits by the investor; and
(3) The profits are derived solely by the efforts of others.
See SEC v. W.J. Howey Co., 328 U.S. 293 (1946).
COMBINATION OF FINANCING
(1) Gifts;
(2) Grants;
(3) Investment in a start-up production company (capital contributions provided by active investors in a C Corporation, S Corporation, or member-managed Limited Liability Company, and the investment of the intellectual property written, acquired, or optioned by the filmmaker-producer);
(3) Financing of development and packaging funds or a portion of production funds raised by a passive investment vehicle compliant with security laws;
(4) Crowdfunding;
(5) Product placement; and/or
(6) Domestic or international negative pickup deal, foreign presales, or tax incentives.
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[@bellagershon7533]

very interesting thanks Justin Sterling

[@Lawyer_Tips]

Thank you for your response. If you have concerns, contact us at [phone] or send us an email at [e-mail]. Thank you!

[@grimmygrinda]

I wish you were in New York because my first project is going to be filmed in NY, but I don't live in NY.

[@Lawyer_Tips]

Thank you for viewing the video. We handle cases across the country and we still may be of service even though your project is in New York. We have a large extensive network that can assist. Please feel free to contact us at telephone number 310-498-2750. We are here to help.

[@danasullivan1311]

Thank you for this information. I am at this stage with my project right now.

[@Lawyer_Tips]

Thank you for your response. If you have concerns, contact us at [phone] or send us an email at [e-mail]. Thank you!

[@sambula1027]

Can you talk about Hedge Fund Investors?

[@Lawyer_Tips]

Thank you for your response. We will mark it up to our next content. If you have concern, contact us at [phone] or send us an email at [e-mail]. Thank you!