ALLOWS COMPANIES TO SOLICIT & ADVERTISE
Under regulations passed under the JOBS Act, companies may advertise and solicit potential investors to raise capital, utilizing the Regulation D, Rule 506(c) exemption.
A company may advertise in all forms of media, including internet funding portals, provided they sell only to accredited investors.
Overview of the exemption includes:
- The burden to prove an investor is accredited is on the company and it must take “reasonable steps” to verify the investor’s status, such as tax returns for income verification, bank, brokerage firm or other statements or letters from accountant, banker, broker, attorney on net worth verification.
- 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.
Rule 506 Offerings save time and money.
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