Rule 506
Rule 506 is a "safe harbor" for the private offering exemption. If your company satisfies the following standards, you can be assured that you are within the Section 4(2) exemption:
- You can raise an unlimited amount of capital;
- You cannot use general solicitation or advertising to market the securities;
- You can sell securities to an unlimited number of accredited investors (the same group we identified in the Rule 505 discussion) and up to 35 other purchasers. Unlike Rule 505, all non-accredited investors, either alone or with a purchaser representative, must be sophisticated - that is, they must have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective investment;
- It is up to you to decide what information you give to accredited investors, so long as it does not violate the antifraud prohibitions. But you must give non-accredited investors disclosure documents that generally are the same as those used in registered offerings. If you provide information to accredited investors, you must make this information available to the non-accredited investors as well;
- You must be available to answer questions by prospective purchasers;
- Financial statement requirements are the same as for Rule 505; and
- Purchasers receive "restricted" securities. Consequently, purchasers may not freely trade the securities in the secondary market after the offering.
Complete Reg D 506 Offering Document Package $1,000.00
Page Links
Why use a Regulation D Offering
Regulation D Basics
Debt Funding through Regulation D
Raising Capital through the Internet
Service Offering
Additional Information:
Regulation D Documentation
If you are just looking for a template that you can design your own PPM documentation then check out our sample documents area by clicking the link.
If you would like a free consultation with a business consultant about what would be necessary to help your project succeed please fill out the form below.
PPM Contact Form.