If you sell the shares in the US without complying with securities law, investors can sue you (personally, not the company) to recover their money if it goes so

If you sell the shares in the US without complying with securities law, investors can sue you (personally, not the company) to recover their money if it goes south. The fact that the government can order the transaction be unwound at any time will also discourage any investors, since it could potentially eliminate any upside for them. You can call the shares whatever you want, but if the SEC deems them securities, they're securities. For an example of this, Prosper (a P2P-lending site) recently got nailed and is facing huge fines and several lawsuits over what they called "loan notes" and the SEC later said needed to be registered as securities. See: http://fred93blog.blogspot.com/2008/11/prospercom-sec-cease-desist-order.html http://fred93blog.blogspot.com/2008/11/prospercom-sec-cease-... (Please don't take any of what I'm writing as legal advice, you really need to talk to a lawyer. There are ways to go the friends-and-family route that aren't horribly expensive.)