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Tagged Posts: Regulation D’

Clarifying How Companies Can Raise Money: Making Things a Little Clearer And, Perhaps, Easier? SEC Proposes Amendments to Rule 147 Intrastate Exemption and Rule 504 of Regulation D (Part 2)

January 14, 2016

More on the Rules for an Offering in a Single State

Rule 147 Intrastate Exemption: Proposed Amendments.

The proposed amendments would: (1) eliminate the current restriction on offers, while continuing to require that sales be made only to residents of the issuer’s state; and (2) redefine what it means to be an “intrastate offering” and ease some of the issuer eligibility requirements, among other things. The SEC noted that the use of the Internet for offerings makes it difficult for issuers to limit offers to in-state residents, especially in the context of intrastate crowdfunding.… Read the rest

Clarifying How Companies Can Raise Money: Making Things a Little Clearer And, Perhaps, Easier? SEC Proposes Amendments to Rule 147 Intrastate Exemption and Rule 504 of Regulation D (Part 1)

January 7, 2016

October was a busy month for the Securities and Exchange Commission (SEC). On October 30, 2015, the day the agency finally voted to adopt the crowdfunding final rules, it also issued proposed rules to amend: (1) Rule 147, which currently provides a safe harbor for compliance with the intrastate exemption; and (2) Rule 504 of Regulation D, which provides an exemption for certain offerings conducted in compliance with applicable state law.[1] (For more discussion on Rule 504 of Regulation D) The full text of the proposed rules is available here.… Read the rest

More Clarification on How To Raise Money Without Registration: SEC Issues Compliance and Disclosure Interpretations on Exempt Offerings (Part 4)

November 12, 2015

Intrastate Exemption.

We briefly touched on the concept of intrastate exemption in our previous blog series on crowdfunding (available here). As the name suggests, intrastate offerings are transactions that do not involve interstate commerce (hence the exemption, as being outside of the scope of the Securities Act of 1933). This is important because, to qualify for the intrastate offering exemption under Rule 147, the transaction must be “genuinely local in character,” i.e., local financing by local industries carried out through local investment.… Read the rest

More Clarification on How To Raise Money Without Registration: SEC Issues Compliance and Disclosure Interpretations on Exempt Offerings (Part 3)

November 5, 2015

General Solicitation.

As we discussed in our previous blog series on exempt offerings (available here), absence of general solicitation is a condition to be met in most exempt offerings, with limited exceptions, such as offering under Rule 506(c).  This is important because, to qualify for an exemption from registration, an issuer must meet all the requirements of the exemption.  General solicitation includes, without limitation, any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media or broadcast over television or radio,[1] as well as other uses of publicly available media, such as unrestricted Web sites.… Read the rest

More Clarification on How To Raise Money Without Registration: SEC Issues Compliance and Disclosure Interpretations on Exempt Offerings (Part 2)

October 31, 2015

Verification of Accredited Investor Status.

The next set of questions are related to the requirement under Rule 506(c) that an issuer take reasonable steps to verify, and form a reasonable belief regarding, the accredited investor status of a purchaser at the time of the sale of securities.[1]  This is important because, to qualify for an exemption from registration, an issuer must meet all the terms and conditions of the exemption, and verification of accredited investor status is a requirement under Rule 506(c).… Read the rest

More Clarification on How To Raise Money Without Registration: SEC Issues Compliance and Disclosure Interpretations on Exempt Offerings (Part 1)

October 27, 2015

On August 6, 2015, the Securities and Exchange Commission (“SEC”) issued Compliance and Disclosure Interpretations (“C&DIs”). For the full text of the C&DIs, click here. C&DIs are not rules, regulations, or statements of the SEC, but reflect the current views of the staff of the agency, which should be of interest to many businesses that want to raise capital through exempt offerings. The recent C&DIs deal with a multitude of issues, through questions and answers, but in this blog series, we will focus on three topics that are particularly relevant: accredited investor status, general solicitation, and intrastate exemption.… Read the rest

Other Exemptions Under Regulation D and the Overwhelming Popularity of Rule 506

August 25, 2015

Regulation D, Rule 506

As you can see, the overwhelming popularity of Rule 506 is largely the result of preemption of state securities laws.  In fact, an analysis of Regulation D offerings based on approximately 27,000 Form Ds filed between September 15, 2008 and October 18, 2010 shows that even transactions with smaller offering amounts, for which Rule 504 or Rule 505 were specifically designed, overwhelmingly elected to use Rule 506.[1]

Imagine, for example, a small business that proposes to raise $1 million by offering its securities in three states.… Read the rest

Other Exemptions Under Regulation D and the Overwhelming Popularity of Rule 506

August 22, 2015

Regulation D, Rule 505

Rule 505 of Regulation D provides an exemption for offerings up to $5,000,000 in a 12-month period.[1]  This exemption is not available to investment companies[2] or the so-called “bad actors.”[3]  Just like in Rule 504 offerings, a company cannot use general solicitation or advertising to sell the securities in Rule 505 offerings.[4]  And just like in other Regulation D offerings, Rule 505 securities are restricted securities[5] and issuers need to file Form D with the SEC.… Read the rest

All postings are intended to be planning tools to familiarize readers with some of the high-level issues discussed therein. No posting is intended to be a comprehensive discussion and additional details should be discussed with your transaction planners including attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity.