April 25, 2024

Faster and More Cost Effective Exempt Offerings

Under the federal securities laws, a company may not offer or sell securities unless the offering has been registered with the SEC or an exemption from registration is available – also known as a private placement or an unregistered offering. One of the benefits to an exempt offering is not going through the time and expense of registering with the SEC. Capital may be raised in private placement offerings by relying on exemptions under Regulation D, Regulation A, and Regulation CF of the Securities Act of 1933, as amended.

Exempt Offerings: Key Questions

In selecting the appropriate exempt offering for their company’s financing needs, you should consider various factors, and ask whether you are:

  • Fundraising from accredited and/or non-accredited investors? Essentially, accredited investors have a net worth of at least U.S. $1 million or annual income of at least $200,000 per year (detailed nuances aside).
  • What offering amount are you considering?
  • Seeking to raise money from friends and family? Or rather, are you seeking to generally solicit and market the offering to the general public?
  • What is your budget and tolerance level in terms of disclosure and audit requirements?

Exempt Offerings: High-Level Comparison

Comparisons between each Reg D, Reg A and Reg CF for your consideration:

  • Reg D (Rules 506(b) or 506(c)) can be used to raise an unlimited amount of capital from accredited investors only.
  • Reg CF enables businesses to raise up to U.S. $5 million from accredited and non-accredited investors. 
  • Reg A allows companies to raise up to U.S. $75 million from accredited and non-accredited investors. Under the right conditions, a Reg A offering can also be used to complete an initial public offering on a national exchange or a direct listing onto OTC Markets.

Soreide Law Group Can Help You Select The Right Offering.

For further information, please contact Lars Soreide, Esq. at Soreide Law Group, 888-760-6552 or at our website at: www.securitieslawyer.com.

Disclaimer: This article is provided as ATTORNEY ADVERTISING and for general informational purposes only. It does not constitute, legal and compliance advice on any specific matter, nor does this article create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.

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