According to the Securities Act of 1933, every company has to register their offering with the SEC in order to sell their shares. There are situations where the exemptions allow the companies to sell their shares without a SEC registration. One such exemption is Regulation D or Reg D.
Reg D provides three exemptions from the registration, Rule 504, Rule 505 and Rule 506.For purposes of online equity crowdfunding, Rule 506 is most significant, and it splits into two different variations, 506B and 506C. In each case, only accredited investors are allowed to invest.Because Reg D 506C allows better access to offerings online by the public for viewing purposes, Concordia Boston helps the companies for their 506C offerings on its platform.
With a 506C offering, the company can raise an unlimited amount of capital, but only from accredited investors.
- It is allowed for the issuing companies to promote and advertise their offerings.
- The issuer companies have to take steps to verify that the investors are actually accredited.
- Although the companies don’t need to register with the SEC, they have to file a Form D, which includes information about the company’s offering, promotors, the companies themselves, and some further information about the offerings.