1. Which Regulation D Exemption Applies to the Offering?
The Securities Act of 1933 generally requires registration unless an exemption applies. Regulation D exemptions differ in investor eligibility and solicitation rules.
Rule 506(B) and Rule 506(C)
Both exemptions permit unlimited fundraising, but their conditions differ.
| Requirement | Rule 506(B) | Rule 506(C) |
|---|---|---|
| General solicitation | Prohibited | Permitted |
| Accredited purchasers | No numerical limit | All must qualify |
| Non-accredited purchasers | Up to 35 in any 90-day period | Not permitted |
| Investor qualification | Reasonable belief | Reasonable verification |
General solicitation
- Rule 506(B)Prohibited
- Rule 506(C)Permitted
Accredited purchasers
- Rule 506(B)No numerical limit
- Rule 506(C)All must qualify
Non-accredited purchasers
- Rule 506(B)Up to 35 in any 90-day period
- Rule 506(C)Not permitted
Investor qualification
- Rule 506(B)Reasonable belief
- Rule 506(C)Reasonable verification
Under Rule 506(b), non-accredited purchasers must meet sophistication requirements, alone or with a representative. Their participation triggers Rule 502(b) disclosures. Rule 506(c) requires reasonable verification of accredited status. An unsupported investor declaration generally is insufficient. These conditions affect eligibility under federal securities regulations.
Rule 504 and State Registration
Rule 504 permits eligible issuers to raise up to $10 million within 12 months. General solicitation is generally restricted, subject to specified exceptions. Unlike Rule 506, Rule 504 does not broadly preempt state registration. Issuers must assess applicable state requirements.
2. When Are SEC and New York Securities Filings Due?
Federal and state deadlines depend on the exemption and sales locations. Issuers should calculate each separately.
SEC Form D through EDGAR
Regulation D Rule 503 generally requires Form D within 15 calendar days after the first Rule 504 or Rule 506 sale. The first sale occurs when an investor becomes irrevocably contractually committed, potentially before payment. Issuers file electronically through SEC EDGAR without a federal fee. Weekend or federal holiday deadlines move to the next business day. Acceptance does not constitute SEC approval.
New York Rule 506 Notice through EFD
Under General Business Law §359-e and 13 NYCRR §10.11, Rule 506 issuers generally must file Form D through NASAA's Electronic Filing Depository (EFD) within 15 days after the first sale within or from New York State.
The filing fee depends on the offering amount:
- $300 for offerings of $500,000 or less.
- $1,200 for offerings exceeding $500,000.
This procedure generally satisfies the state's initial issuer statement, State Notice, and Further State Notice requirements. The filing remains valid for four years. Continued offerings may require renewal, while material changes may trigger amendments and fees.
Non-Covered Offerings and Special Filings
Issuers of certain non-covered securities, including Rule 504 offerings, generally file an M-11 statement with the New York Attorney General's Investor Protection Bureau. Applicable State Notice and Further State Notice documents go to the Department of State. Nonresident issuers may also need Form U-2.
Required registration generally must be accepted before offers or sales, unless an exemption applies. Real estate or mortgage securities may require separate procedures under GBL §352-e. The filing route depends on the securities and transaction structure, including capital markets transactions.
3. What Should Issuers Check in Offering Documents?
A valid exemption does not excuse misleading disclosures or inconsistent investment terms. Issuers should review contractual rights and material information before accepting commitments.
Subscription Agreements and Ownership Rights
Subscription agreements identify securities, purchase price, closing conditions, and investor representations. Equity terms may address voting rights, liquidation preferences, dilution, and transfer restrictions. These should align with corporate documents and existing shareholder agreements.
Material Risks and Investor Information
Federal antifraud provisions prohibit material misstatements and misleading omissions. Issuers should accurately disclose material financial information, use of proceeds, conflicts, and investment risks. Rule 506(b) requires additional disclosures and financial statements when non-accredited investors participate. Accredited-only offerings remain subject to antifraud obligations.
4. What Can Trigger Securities Enforcement Despite Filing?
Timely filings do not establish compliance with every securities requirement. Marketing, intermediary compensation, and disqualifying events create separate risks.
Marketing Records and Paid Finders
Issuers should preserve advertisements, investor communications, and purchaser eligibility records. Transaction-based compensation to outside finders may raise federal broker-dealer registration issues. In New York, officers, directors, principals, or partners listed on Form D or M-11 generally need no separate salesperson registration. Other selling agents may require registration.
Bad-Actor Disqualification
Rule 506(d) may disqualify offerings involving covered persons with specified convictions, court orders, or regulatory histories. Covered persons include certain owners, directors, executive officers, and paid solicitors. Exceptions, look-back periods, and waivers require separate review. Issuers should screen participants before sales and review subsequent changes. Violations may lead to securities enforcement proceedings.
5. Frequently Asked Questions
Is There a Separate New York City Form D Filing?
No separate city-level Form D generally applies. New York State obligations depend on offers or sales within or from the state, not simply the issuer's address. Issuers should identify the jurisdictions where fundraising occurs.
Does a Late SEC Form D Automatically Cancel the Exemption?
No. Timely Form D filing is mandatory but not itself a condition of the Rule 504 or Rule 506 exemption. An issuer that misses the deadline should file as soon as practicable. Rule 507 addresses certain noncompliance consequences. Separate state deadlines require independent review.
6. When Should an Issuer Seek a Securities Attorney'S Review?
Before circulating materials or accepting subscriptions, a securities attorney may assess exemptions, sales locations, filing requirements, and intermediary compensation. Legal review can also address subscription agreements, investor communications, ownership records, and disclosure deficiencies.
22 Oct, 2026
