Blue Sky Reg D Exemptions


The Securities Act of 1933 mandates that any offer to sell securities be registered through the SEC, or qualify for an exemption. There are many different ways for securities to be considered exempt, however three common ways are through Regulation D (Reg D). Reg D provides three rules, 504, 505, and 506 that all outline exemptions. These rules allow some companies to sell and offer securities without registering these securities with the SEC, but instead filing a Form D notice.

Regulation D Federal Exemptions

Companies that rely on Reg D are exempt from registering their securities with the SEC, however they must file a “Form D” with the SEC after first selling their securities. Form D includes the names and addresses of the company’s promoters, executive officers and directors and brief details about the offering.

 

Rule 504

Rule 506(b)

Rule 506(c)

General Solicitation allowed?

Allowed only in certain circumstances, with several restrictions

Not allowed

Allowed

Issuer Requirements

Restrictions on 'bad actor' disqualifications applied

 

Excludes the typical reporting and investment company restrictions

Restrictions on 'bad actor' disqualifications applied

Restrictions on 'bad actor' disqualifications applied

Requirements for Investors

No requirements

Unlimited accredited investors allowed, but only 35 maximum non-accredited investors permitted

Unlimited accredited investors allowed, but issuers must take precautions to ensure that investors are, in fact, accredited investors

Resale Restrictions

Yes, restrictions on resale, except in several circumstances

Yes, restrictions on resale

Yes, restrictions on resale

State Requirement Exemptions?

No, state restrictions and regulations still apply

Yes, state laws are preempted. Notice may be required.

Yes, state laws are preempted. Notice is still be required.

SEC Filing Requirements

Form D required

Form D required, if non-accredited investors involved, additional information is required

Form D required

Limits on Offerings Within a Year

$5 million limit

No limits

No limits

Regulation D State Exemptions

For individual state exemptions, please visit the