- December 6, 2012
- Posted by: John Fischer
- Category: Accredited Investors
SEC Accredited Investor Rules 504, 505 and 506 private placement offerings are terms used to break down certain regulatory exemptions contained in Regulation D of the Securities Act of 1933 that allow some companies to offer and sell securities in their company without having to register those securities with the SEC.
SEC Accredited Investor Rules 504 allows a company to offer and sell up to $1,000,000 of their securities in a 12 month period, as long as those companies meet certain requirements for corporate structure and other SEC restrictions. Rule 504 offerings, while not required to register the security in all cases, are required to adhere to any individual state requirements and exemptions and file a Form D upon initial sale of the security. For more information on Rule 504 offerings, please see the official SEC regulations.
Rule 505 allows a company to offer and sell up to $5,000,000 of their securities in a 12 month period. The federal and state regulations regarding exemptions, information provided to the investor, certifications of financial records and many other elements of the offering are a little more stringent than those contained in Rule 504. To learn more about Rule 505 offerings, please see the official SEC regulations.
Rule 506 provides companies with the opportunity to generate an unlimited amount of money without time constraints, though the amount of regulations and company criteria that must be met is at the highest level for this type of private placement offerings. Additionally, the securities sold under Rule 506 are “restricted securities,” which don’t allow the purchaser to resell the securities for one full year without filing the appropriate registrations. To read more about the requirements and stipulations regarding Rule 506 offerings, please see the official SEC regulations.
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