Exempt Offerings

Can My Company Legally Offer And Sell Securities Without Registering With The SEC?

Every offer and sale of securities must either be registered under the Securities Act of 1933 or rely on an available exemption from registration, most of which are listed below.

Regulation D –Rule 506(b), Rule 506(c) and Rule 504

• Rule 506(b), private placements prohibiting general solicitation: transactions by an issuer not involving any public offering and limits sales to no more than 35 non-accredited investors in any 90 day period.  
• Rule 506(c), private placement permitting general solicitation: permits the use of general solicitation where all purchasers are accredited investors and the issuer takes reasonable steps to verify that the purchasers are accredited investors. 
• Rule 504, limited offerings of up to $10 million: permits the offer and sale of up to $10 million of securities in a 12-month period and is often used for regional (multi-state) offerings.
• Form D required for all Regulation D offerings: an issuer must file this notice within 15 days after the first sale of securities in an offering relying on Rule 506(b), Rule 506(c) or Rule 504. The SEC does not charge any filing fee for a Form D notice or amendment. Form D notices and amendments must be filed online using the SEC's EDGAR (Electronic Data Gathering, Analysis and Retrieval) system.  

Regulation Crowdfunding – Offerings of up to $5 million

Regulation Crowdfunding enables certain companies to offer and sell securities on an internet based platform through an intermediary that is a registered broker-dealer or registered funding portal. 

Regulation A – Offerings of up to $75 million

Regulation A is an exemption from registration for public offerings, although offerings made pursuant to this exemption share many characteristics with registered offerings. 

Intrastate offerings – Limited to state where issuer has its principal place of Business and is considered to be “doing business”

Rule 147, a “safe harbor” under Section 3(a)(11), and the intrastate offering exemption under Rule 147A permit companies to raise money from investors within their state without concurrently registering the offers and sales at the federal level. 

Employee benefit plans – Rule 701

Rule 701 exempts certain sales of securities made to compensate employees, consultants and advisors in a non-capital raising transaction and is not available to Exchange Act reporting companies. 

Frequently asked questions about exempt offerings

• Do the anti-fraud provisions apply?
• What is an accredited investor?
• Do state law requirements apply?
• What are restricted securities?
• What about waivers of “bad actor” disqualification?