There is a reason why businesses, hedge funds and private equity firms are turning to Regulation D, Rule 506 offerings to accredited investors to raise capital.
SEC records show Rule 506 offerings account for 99% of all money raised from Regulation D offerings. It’s the only exemption registered broker/dealers generally use.
- It’s exempt from the costly and timely registration of securities with the SEC. You just have to file a Form D with the SEC 15 days after your first sale.
- You can raise an unlimited amount of funds from accredited investors.
- You can have an unlimited number of accredited investors.
- You don’t need audited financials.
- You don’t have to register with states, though a notice filing and fee may be required.
- Allows you to use angel and internet equity and debt capital raising sites.
- The burden is on the investor to attest he is accredited. No due diligence is required outside of the executed questionnaire (unless you have knowledge he isn’t accredited).
- However, companies may NOT solicit or advertise their offerings.
Rule 506 Offerings save time and money.
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