Regulation D allows issuers to get an exemption so that they don’t have to register their securities with the US Securities and Exchange Commission (SEC). Using a transfer agent can help you set up a Reg D crowdfunding portal, and the agent can also offer services that include Rule 506(c) and 506(b) offerings, which allows issuers to raise money from their investors.
What the Rules State
With both rules, you have no limits on the dollar amounts that can be raised. There are no general solicitations allowed with Rule 506(b), but there are with Rule 506(c). Both Rules have ‘bad actor’ disqualifications for issuers and have a variety of requirements for investors. For example, Rule 506(b) allows for an unlimited amount of accredited investors and up to 35 non-accredited investors while Rule 506(c) allows for unlimited accredited investors, but you have the obligation of ensuring that the investors are accredited.
Resale restrictions also apply for both Rules, as restricted securities can’t be sold for at least a year and you need a legal opinion before you can sell them.
Along with such, you have state requirement exemptions available, but you may still need to notify Blue Sky. Along with such, both Rules have requirements for SEC filing. Primarily, Form D is required, though, with Rule 506(b), you may also need additional information if the investors are non-accredited.
Other rules for Regulation D do not allow you to solicit offers, but Rule 506(c) does. The Rule states that your offering has to be financed by accredited investors only and that you make sure all investors that participate are indeed accredited. Along with such, you can advertise through any media necessary, including posters, brochures, and social media, among others. Because of your capabilities to advertise, you can increase the investors that you reach and increase the capital raised. For more visit EquityTrack.
