A custodial account is a bank account that can be used to hold your investments (in legal speak, your securities). Unlike when you make investments on Republic without a custodial account, a custodial account allows you to name a beneficiary and accept payments such as dividend distributions or cash payouts. Custodial accounts are not managed or held by Republic; instead, our escrow agent PrimeTrust manages them. A custodial account is like a box you can passively hold your investments in safely and securely with a bank, making sure no one can claim your investment without your consent.
In short: because it's better for you and the company you've invested in.
Traditionally, when making investments on Republic, and other Reg CF platforms, investors purchase their securities directly. In other words, just like you can buy a toaster on Amazon and hold it in your hands, securities purchased directly are held by you, the investor, not a broker or other intermediary like most publicly traded securities (like AAPL).
Some companies have moved toward an issuance model where investors may only purchase the securities if a third-party bank can hold the security for them. Companies do this to ensure that all securities they sell during their campaign are in the same place. This means if a liquidity event occurs or other actions with respect to the securities are necessary, the company can look to one bank to service the securities, rather than each individual (which can get very difficult if there are thousands of investors!). If a company is requiring custodial accounts to participate in their campaign on Republic, is the only way to participate.
It's completely automated between Republic and PrimeTrust: you don’t need to do anything except filling out your information when prompted. It is then sent securely to PrimeTrust, and an account is opened in your name.
No! Opening a custodial account is free. We think it provides some great investor protections. Note, if you ever want to move your securities out of your custodial account if they are not freely tradeable or not cash equivalent, you may incur a fee to do so, learn more here.
Great question, and the answer is, whatever you want. You can either use your account with Prime Trust to act as a wallet or safety deposit box for your securities purchase on Republic. But by logging into your account on PrimeTrust you can unlock a suite of other options, like opening up an IRA, trading crypto and holding cash.
For investors, it means their security interest will be held by a bank, meaning it can’t be lost like an email or a piece of paper. Having an account means you can designate transfer on death rights and better integrate your holdings into your estate planning. For companies, it can drastically increase efficiency by reducing their cap table management costs and by keeping their cap tables clean, helping them raise future rounds. When exits occur, providing their holders cash or securities is easiest to do all in one place.
Republic Core LLC (“Core”) provides technology and support services to OpenDeal Inc. and its affiliates (collectively, the “Republic Ecosystem”). Republic Note holders and as well as users of the site and services maintained by the Republic Ecosystem, regardless of and their activities on or relating to the Republic Ecosystem, are subject to the applicable terms of service, in their entirety.
Core is currently conducting an offering of Republic Notes under Rule 506(c) of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”) to persons who are accredited investors, as that term is defined in Rule 501. Only accredited investors are eligible to participate in the Rule 506(c) offering. Accredited investors who wish to participate in the Rule 506(c) offering should receive and review carefully the Private Placement Memorandum pertaining to that offering, as it contains important information for potential investors to consider prior to making an investment decision. Accredited investors who wish to participate in the Rule 506(c) offering will be required to (i) complete a subscription agreement, (ii) acknowledge that they have received and read the Private Placement Memorandum, and (iii) provide information verifying their status as accredited investors.
Core is also “testing the waters” with respect to the sale of Republic Notes under Regulation A of the Securities Act. The “testing the waters” process allows companies to determine whether there may be interest in an eventual offering of its securities to qualified purchasers under Regulation A. Core is not under any obligation to make an offering under Regulation A. No money or other consideration is being solicited for an offering under Regulation A at this time and, if sent, it will not be accepted.
Core may choose to make an offering to some, but not all, of the people who indicate an interest in investing, and that offering may or may not be made under Regulation A. For example, Core may choose to proceed with its offering under Rule 506(c) without ever conducting a Regulation A offering, in which case only accredited investors within the meaning of Rule 501 will be able to buy Republic Notes.
If and when Core conducts an offering under Regulation A of the Act, it will do so only once (i) it has filed an offering statement with the Securities and Exchange Commission (“SEC”), (ii) the SEC has qualified such offering statement and (iii) investors have subscribed to the offering in the manner provided for in the offering statement. The information in the offering statement will be more complete than any test-the-waters materials and could differ in important ways. Prospective investors who are interested in participating in the Regulation A offering must read the offering statement filed with the SEC, when that offering statement becomes publicly available.
No money or other consideration is being solicited at this time in connection with any potential Regulation A offering and, if tendered, will not be accepted. No offer to buy securities in a Regulation A offering can be accepted and no part of the purchase price can be received until an offering statement is qualified with the SEC. Any offer to buy securities may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of its acceptance is given after the qualification date. Any indication of interest in Core’s offering involves no obligation or commitment of any kind.