PRIVATE PLACEMENT MEMORANDUMS UNDER REGULATION D FOR RULES 506, 505 & 504 NEW ELECTRONIC FILING & AMENDING INSTRUCTIONS FOR FORM D NOTICES TO SEC
Beginning March 16, 2009, all companies filing a Form D Notice for offerings that are exempt from registration pursuant to Rule 506, Rule 505, and Rule 504 under Regulation D or Section 4(6) of the Securities Act of 1933 (the “Act”) must be filed electronically. Form D Notices for Regulation D offerings under Rule 506, 505 and 504 will no longer be accepted by the SEC after this date. When utilizing a private placement memorandum for the offer and sale of securities, a company must file a Form D Notice with the SEC. Such Form D Notices must be filed within 15 days after the first sale of securities. The date of first sale is determined by the date of the first sale on which the first investor is irrevocably contractually committed to invest (if such a date lands on a Saturday, Sunday or holiday, it is moved to the next business day).
Electronic Filing of Form D Notice. After you have drafted a private placement memorandum or private placement memo, as it is often referred to and sold securities as stated above, you must obtain and file a Form D Notice. The Form D Notices can be found on the SEC’s web site at http:// www. sec.gov. Before a company can file a Form D Notice or amendment on line, it must obtain its own filer identification number (called a "Central Index Key" or "CIK" number) and a set of password-like "access codes" which will allow it to use the SEC’s online filing system, "EDGAR." "EDGAR" stands for Electronic Data Gathering, Analysis and Retrieval" system. A company can obtain a CIK number and EDGAR access codes at any time, even well before your company or fund is ready to file its first online Form D notice. To get them, you must complete and submit to the SEC a Form ID, which provides the agency with basic information about the filer. For more information on obtaining a CIK and EDGAR access codes visit the SEC’s web site. Alternatively, for your Regulation D Rule 506, 505 or 504 offerings, you may also use private companies who will obtain the CIK and file the Form D Notice, and any amendments, for you. Brandon Brown & Associates provides to our clients lists of providers that provide the Edgar services at a reasonable cost.
Amendments to Form D Filings. A Form D filer may file an amendment to a previously filed Form D Notice online, by indicating in the space provided on the form that the filing is an amendment rather than a new filing. You can file an amendment anytime. However, you must file an amendment for an offering under the following circumstances:
- if there is a change in the information in the Form D previously filed (i.e. if there are new investors etc); and
- to correct a material mistake, error or material omission in the previously filed Form D Notice, which should be filed as soon as possible after you discover the mistake or material omission.
You don’t have to file an amendment under the following circumstances:
- changes that occur after the offer is terminated; the address or relationship to the issuer of a related person identified; an issuer’s revenues or aggregate net asset value;
- the minimum investment amount, if the change is an increase, or if the change, together with all other changes in that amount since the previously filed notice, does not result in a decrease of more than 10%;
- any address or state(s) of solicitation for a person receiving sales compensation;
- the total offering amount, if the change is a decrease, or if the change, together with all other changes in that amount since the previously filed notice, does not result in an increase of more than 10%;
- the amount of securities sold in the offering or the amount remaining to be sold;
- the number of non-accredited investors who have invested in the offering, as long as the change does not increase the number to more than 35;
- the total number of investors who have invested in the offering; and
- the amount of sales commissions, finders’ fees or use of proceeds for payments to executive officers, directors or promoters, if the change is a decrease, or if the change, together with all other changes in that amount since the previously filed notice, does not result in an increase of more than 10%.
Reg D Offerings Using a Private Placement Memorandum. It is important for companies to draft a private placement memorandum in order to assist in protecting the principals of the companies from potential liability from investors for securities violations.
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