The Book of Jargon®

Acronym for Qualified Institutional Buyer (QIB).

A Financing with negotiated parameters (e.g., must raise at least US$4 million from third-party Investors) that must be met in order to trigger the occurrence of a specified event, such as the automatic conversion of Convertible Promissory Note.

Large Institutional Investors that must have at least US$100 million invested in Securities or under management. Qualified Institutional Buyers are the permitted Purchasers of Securities in Rule 144A Financing. See Rule 144A.

Capital Stock of a domestic C Corporation that operates an active business satisfying various technical requirements set forth in the Internal Revenue Code, which must be reviewed on a case-by-case basis. For example, the corporation must use at least 80% of its asset value in the active conduct of one or more “qualified trades or businesses” (as defined in the IRC), and the corporation’s “aggregate gross assets” cannot exceed US$50 million immediately after the Stock is issued. As a result, many Startups may qualify and be eligible to issue QSBS. Many companies in the new and emerging technology sector are potentially eligible to issue QSBS. From a Stockholder’s perspective, the receipt of QSBS is beneficial as there is a certain level of gain exclusion from the sale of Stock if held for more than five years (note that the level of gain exclusion may vary depending on when the QSBS was acquired, but could be as much as 100% exclusion).