{"id":393,"date":"2014-04-21T14:12:42","date_gmt":"2014-04-21T19:12:42","guid":{"rendered":"http:\/\/www.accreditedinvestorleads.com\/?p=393"},"modified":"2020-01-21T17:54:02","modified_gmt":"2020-01-21T21:54:02","slug":"reg-d-rule-504-small-companies","status":"publish","type":"post","link":"https:\/\/www.accreditedinvestorleads.com\/reg-d-rule-504-small-companies\/","title":{"rendered":"Reg D Rule 504 is Ideal for Small Companies"},"content":{"rendered":"

Regulation D provides several ways for companies to raise money without officially registering with the SEC. \u00a0This saves time and money, as preparing for a public offering is very intensive. \u00a0For many smaller companies, or start ups, going public is simply not an option. \u00a0Fortunately, it’s not necessary either. More money is raised through private offerings than the stock market every year, making Reg D a truly attractive option.<\/p>\n

There are several rules within Regulation D that you can use to raise capital including Rule 504, Rule 505, Rule 506 (b) and 506 (c). Rule 504 has been designed for smaller companies to raise capital and has several distinct benefits. \u00a0It is also referred to as a small corporate offering registration (SCOR). \u00a0When issuing a private offering under Reg D Rule 504 a company can raise up to $1 million per 12 months.<\/p>\n

Prior to selling shares a company needs to complete the SCOR form and submit it to the various states where they plan on selling securities. \u00a0Most states accept the same form, making it extremely easy to file it. \u00a0Alabama, Florida, Delaware, Hawaii, Kentucky, and New York do not accept the standard SCOR form so if you are selling in these states you need to contact their Department of Financial Institutions to see what, if any, state forms you need to file. \u00a0The purpose of this form is to inform a state that you are selling securities there. \u00a0Once you have sold your first security you need to file a Form D with the SEC.<\/p>\n

The disclosure requirements are extremely limited. \u00a0The amount of information you provide to potential investors is based upon what you feel is pertinent and relevant to the transaction. \u00a0By limiting the set disclosure requirements it is easier for small businesses to publish their private offerings. \u00a0It is important to note that specific states may have additional disclosure requirement and that you still have to give enough disclosures so that you cannot be accused of violating anti-fraud provisions.<\/p>\n

Generally speaking, securities sold under Reg D Rule 504 are restricted and unable to be sold unless you register with the SEC. \u00a0There are exemptions under Reg D Rule 504 that will remove the restriction.<\/p>\n