Section 3, Other Types Of Offerings

What is a Regulation D Offering?

A private placement exempt from full registration under the Securities Act of 1933 for private companies under certain conditions.

What is the limit for a Rule 504 Offering?

$10,000,000.

Who are considered accredited investors under Reg D?

Institutional investors, venture capital/private business development companies, tax-exempt organizations, directors/officers/general partners of the issuer, individuals with net worth over $1,000,000, or income over $200,000 ($300,000 joint).

What is a Rule 506(b) Offering?

Traditional private placement that allows non-accredited investors (up to 35 sophisticated investors) to participate if given disclosure, while accredited investors are unlimited.

Are securities issued under Rule 506(b) restricted or unrestricted?

Restricted.

What is required when purchasing a restricted security in a private placement?

Signing an Investment Letter and holding the stock for at least 6 months.

What is a Rule 506(c) Offering?

Private placement allowing general solicitation/advertising, but all purchasers must be accredited investors verified by reasonable steps.

What is Regulation Crowdfunding (Reg CF)?

Startups may raise up to $5,000,000 in a 12-month period from both accredited and non-accredited investors with investment limits based on income/net worth.

What does SEC Rule 144 regulate?

Public resale of restricted (unregistered) and control stock, including holding periods, volume limits, and reporting requirements.

How long must restricted securities be held under Rule 144 before sale?

At least 6 months.

What is a Form 144?

Notice of Offering required when selling restricted/control stock; effective for 90 days.

Who can buy restricted securities under SEC Rule 144-A?

Qualified Institutional Buyers (QIBs), such as insurance companies, banks, RBICs, LLCs, and trust funds.

What does SEC Rule 145 cover?

Registration of transactions considered an "Offer to Sell" as part of mergers, consolidations, or stock reclassifications.

Does Rule 145 require registration for stock splits or par value changes?

No.

What is SEC Rule 147?

Covers intrastate offerings; all sales/resales for 6 months must be to residents of the same state and are exempt from standard SEC registration.

What are Blue Sky Laws?

State securities laws requiring registration, preventing misrepresentation, and ensuring sellers are licensed in the state.

What is required to sell a security in a state under Blue Sky Laws?

The security must be registered, exempt, or a federal covered security on a national exchange.

What is unlawful under interstate commerce prohibitions?

Selling unregistered securities using mail or interstate commerce before registration.

What constitutes fraudulent interstate transactions?

Using any device, scheme, untrue statement, or deceit to defraud a purchaser via mail or interstate commerce.

What is a buyback?

When a company repurchases its own outstanding shares on the open market.

What is an exchange offer?

An offer by a company to exchange outstanding shares or bonds for other securities issued by the company.

What is a merger?

Two independent companies combine into one larger company with one company’s ownership transferred by cash or stock swap.

What is an acquisition?

When one company purchases another company and combines both into a larger entity.

What is a tender offer?

An offer made directly to shareholders to buy all shares at a premium to market price to encourage selling.

Regulation D Offering

Exemption from full registration under the 1933 Act for private placements.

Rule 504 Offering

Private placement limited to $10,000,000.

Accredited Investor

An investor meeting specific financial criteria (institutional investor, net worth, income, or organizational assets) eligible for private placements.

Rule 506(b) Offering

Traditional private placement without general solicitation; allows up to 35 non-accredited investors with disclosure.

Restricted Security

A security that cannot be resold publicly without registration or exemption, typically purchased in private placements.

Investment Letter

Document signed by an investor agreeing to hold a restricted security for a minimum period.

Rule 506(c) Offering

Private placement permitting general solicitation, requiring all investors to be accredited and verified.

Regulation Crowdfunding (Reg CF)

Allows startups to raise up to $5,000,000 from accredited and non-accredited investors with limits based on income or net worth.

SEC Rule 144

Regulation of resale of restricted and control stock including holding period, volume limits, and reporting.

Control Stock

Shares held by affiliates or officers/directors of the company, may be restricted or registered.

Form 144

Notice filed with SEC for selling restricted/control stock; valid for 90 days.

SEC Rule 144-A

Allows sale of restricted securities to QIBs during restricted period.

Qualified Institutional Buyer (QIB)

Institutional entity eligible to buy unregistered securities under Rule 144-A.

SEC Rule 145

Requires registration of transactions considered “Offer to Sell” during mergers, consolidations, or stock reclassifications.

SEC Rule 147

Exempts intrastate offerings; sales restricted to state residents for 6 months.

Blue Sky Laws

State laws regulating securities registration, licensing of sellers, and preventing misrepresentation.

Buyback

When a company repurchases its own shares from the open market.

Exchange Offer

Company offer to exchange outstanding securities for new securities issued by the company.

Merger

Combination of two independent companies into a larger company.

Acquisition

Purchase of one company by another to combine operations.

Tender Offer

Offer made directly to shareholders to buy all shares at a premium to market value.