REGULATION D OFFERINGS
How it Works
What is Regulation D?
The Securities Act of 1933 spawned Regulation D or Reg D. The purpose of Reg D is to ensure that growing companies are able to be compliant while handling an infusion of fractional investment capital from a group of individual investors. Simply stated, the company can offer a private equity stake to a group of investors that combine their capital to buy a portion of the company (creating a security in the process because they are buying components of a business structure). Whether companies are seeking start-up capital or need to raise equity with the intention of launching an Initial Public Offering or IPO at a later date, there is no other form of financing as flexible and consistently proven as a Reg D offering.
HOW IT WORKS:
According to the SEC only 13% of Regulation D Offerings since 2009 report using a financial intermediary such as a Broker/Dealer or Finder.
Reg D Offerings/Private Placements
Private Placements or private stock offerings are “private” equity/debt transactions and are considerably less expensive to complete than an initial public offering such as an IPO (for the purpose of raising capital). While companies using a Reg D exemption do not have to register their securities and usually do not have to file reports with the SEC, they must file what’s known as a "Form D" after they first sell their securities. Form D is a brief notice that includes the names and addresses of the company’s owners and stock promoters, but contains little other information about the company.
Who Should Use Regulation D?
Any private or public company seeking to raise capital or private financing from investors should have a securities offering in place. Only a securities offering can provide the needed federal and state requirements to keep the investment capital safe from being rescinded at a later date. Regulation D Offerings provide the framework for raising capital from private investors, regardless of your industry type, age of your company, or the size of your organization.
Can I Advertise my Offering?
The SEC (and for Rules 504 and 505 each state) has specific rules concerning how a company solicits capital from investors - even if only a few investors are involved. Through the enactment of the Jump-start Our Business Start-ups (JOBS) Act you are now allowed to use general advertising using Rule 506(c) under certain conditions.
Find a PPM Template for Your Offering:
We have PPM Templates for Debt, Equity, Debt Convertible and even a Combo Debt/Equity