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