SEC Exemptions

FILE- This Dec. 17, 2008 file photo shows the exterior of the Securities and Exchange Commission (SEC) headquarters in Washington. An American judge for the U.S. Securities & Exchange Commission has ruled the China arms of global accounting firms should be barred from providing audits for U.S.-traded companies in a dispute that might force major corporate names such as oil giant PetroChina and search engine Baidu to withdraw from American stock exchanges. (AP Photo, File)

SEC Exemptions

sec-comp-intro

 

 

 

 

Private Placement Exemption 

      Sophisticated investors only

      Access to information normally available to a registered offering

      Agree not to resell the securities to the public.

      506(b) is the safe harbour for this exemption

 

Regulation D Rule 504   

             $1MM cap per year.

             Subject to state securities laws.

             May be able to sell to non-accredited investors.

             May be able to generally solicit for investment.

             Restricted Securities

             No specific disclosure requirements

 

Regulation D Rule 505 

             Typically not used.

             Up to $5MM per year.

             Not all investors have to be sophisticated.

             Unlimited number of accredited investors and up to 35 unaccrediteds

             No general solicitation

             Subject to state securities laws.

             Substantive disclosure document required.

 

Regulation D Rule 506(b) 

             Unlimited amount.

             Unlimited accredited investors; up to 35 unaccredited.

             No general solicitation

             Covered securities

             All investors must be sophisticated.  They must have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the investment. 

            Not subject to state securities laws.

            Substantive disclosure document required.

 

Regulation D Rule 506(c) 

            Unlimited amount.

            Unlimited accredited investors; no unaccredited investors.

            General solicitation / advertising permitted.

            Covered securities

            All investors must be sophisticated.  They must have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the investment.

            Not subject to state securities laws.

            Substantive disclosure document required.

            Issuer takes reasonable steps to verify that the investors are accredited.

            Proposed rules would complicate matters.

 

Regulation A – Public Offerings not to Exceed $5MM   

            Up to $5MM

            Mini public offering.

            Securities are not restricted.

            The registration process is greater than for Reg D but lesser than an IPO

            Covered securities.

            Typically not used.

 

Regulation A+     

            Up to $50MM per year and increasing annually.

            Securities are not restricted.

            Can sell to unaccrediteds.

            Covered securities

 

Accredited Investor Exemption

            $5MM annual max

            All must be accredited.

            No general solicitation

            No disclosure requirement.

 

Intrastate Offerings (3(a)(11))  

            Company must be organized in the state where it is offering the securities

            Carry out a significant amount of its business in that state

            Make offers and sales only to people in that state

            Rule 147 – safe harbour for this.

            No limit on size; no limit on number.

            Sale of one security within 9 months might violate the entire offering.

            Subject to state securities laws.                

 

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