When your production company intends to finance movies, you will need to be aware of several key terms that are part of the film financing vocabulary. Terms such as "active investor" (a person or company that gives money with the expectation of having an active part in the production process), "attachment" (an actor or actress who is already signed on, or attached to the project) and "WGA" (the Writers Guild of America) will be commonly used, and you must know what they mean.
After you learn the terms that are involved in the independent financing process, you will be ready to seek out film funding for your company's projects. There are a few things you will need to do at this point:
1. Hire a lawyer who understands film production financing.
2. Learn what the Securities and Exchange Commission is and how it can affect your business.
3. Create contracts for the investors who will be financing film production activities on your behalf.
Get help from an entertainment securities lawyer when financing filmsAn entertainment lawyer will help your production company when you are looking for start-up financing film production funding. One important thing they will do for you is "exemption filing," which is the process of filing for an exemption from the Securities and Exchange Commission's (SEC) federal registration policy to save your company a large sum of money. When this process is successful, it becomes known as an "exempt offering." Another important service a lawyer will provide is an "initial public offering." This involves obtaining the rights to offer the final film to for public consumption. Entertainment lawyers also work with the SEC to provide legal investment contracts to private film investors, which is known as a "registered offering." Only a certified entertainment lawyer is qualified to carry out these essential duties.
Hire a registered agent when your company is ready to obtain movie production financingA film production company will be an established corporation or Limited Liability Company (LLC). LLCs are nothing more than businesses registered within any state. Every LLC is required to have a registered agent. This individual provides compliance services to the business owner to make sure the business is up to date on any rules and regulations for the state they are filming in.
Sign a private placement memorandum contract with independent film financing investorsA private placement memorandum (PPM) is a contract signed by an investor that will have nothing to do with the production of the film. The PPM is also referred to by other film production financing key terms such as "small securities offering," "limited offering" or "exempt securities offering." Regardless of the name used, the PPM is a legally binding contract that stipulates the investor will offer film finance capital and have no other involvement unless the movie makes a profit.
- Learn the important film production financing key terms before attempting to talk to industry professionals so that they will be assured you know what you are doing.
- Understand the expectations from active film financiers who intend to be involved in the production of your film before accepting any money or signing contracts.