You are required to provide investors with all material facts that would affect their decision to invest with you. If you have changed the terms they reviewed when they agreed to make the investment, you must show them the new terms so they can decide whether they still want to remain invested. If they haven’t decided yet, you need to provide them with updates that change any materials facts regarding the object of the investment. Such things may include a change in the management team, changed projections, discovery of additional expense items, unexpected delays in acquisition or achieving a projected milestone.
Any time there is a change in material facts during the raise period, you must give investors who have already invested an opportunity to “opt out” (i.e., you need to allow them to rescind their offer to invest) and get their money back if they don’t agree to the new terms. If they do agree, you will want to make sure they “re-affirm” their investment after having reviewed the changed conditions. We usually do this by providing an amendment to the PPM describing the changes, with a place for investors to acknowledge receipt. For any previous investors, we would typically also provide a form for them to re-affirm their subscription after having reviewed the PPM amendment.
Once you have already acquired an asset and investor funds have been used, you have a duty to keep your investors informed of all material facts related to the investment. You would typically do this through quarterly updates, but for periods of significant activity (i.e,. construction, major renovations, etc.), or if the project is in financial trouble, you may need to provide more frequent updates, depending on the circumstances.