Tags: Deal Maker


Raising capital is difficult. The rules surrounding how, why, when, where, and from who, can be even more of a thorn in the side of a business owner.

Sooner or later, you and your business partners may need outside capital to help expand your business. Beyond asking friends and family, how would you go about it?

Under the Securities Act of 1933, any offer to sell securities (think stock in a company) must either be registered with the SEC (Securities and Exchange Commission) or meet an exemption. Unless you have tens of millions of dollars and plan on making a million more, going public and registering your securities with the SEC is not an option.

But fear not!

The SEC has set out certain guidelines and regulations commonly referred to as "Regulation D Exemptions" or "private placements," that allow for the raising of capital without the hassles of SEC offer registration (although some SEC registration is still necessary). And if you are looking to raise some serious capital, this could be a good option for you.

Regulation D offerings come in three forms, all with their own advantages and disadvantages. The three forms consist of Rules 504, 505, and 506. Below, is a brief synopsis concerning each Rule. If you are looking to raise some capital and these options seem like a possible right fit for you, please reach out and let us help you!


  • Raise 1,000,000 dollars in a 12-month period
  • Public solicitation okay (must meet certain requirements)


  • Can raise 5,000,000 dollars in 12-month period
  • Sell unlimited number of shares to "accredited investors"
  • 35 non-accredited/non-sophisticated investors
  • No general solicitation or advertising
  • (Both accredited and sophisticated investors are terms of art in the Securities world)

506: "safe harbor" for the private offering exemption of Section 4(a)(2) of the Securities Act 

  • 506(b):
    • No general solicitation
    • Unlimited number of Accredited Investors
    • 35 other purchasers that are not accredited, however, must be Sophisticated
  • 506(c):
    • Allows for general solicitations
    • Only accredited investors allowed

As any good area of law, these rules are not this simple, and there are still more hoops to jump through to make sure you are protected as a business owner raising capital. That is where Goosmann Law is here to help! For more information on Reg D capital raising, or general capital raising for expanding  your business, call your Sioux Falls Law Firm, Sioux City Law Firm, or Omaha Law Firm today! 

For more posts about making the most out of your business deals, check out our Deal Maker blog! http://blog.goosmannlaw.com/deal-maker-on-your-side


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