In connection with these amendments to Rule 506, the SEC approved amendments to Form D, adding a box check box requiring issuers to disclose if they are relying on Rule 506(c). As discussed below, the SEC also proposed significant
amendments to Form D’s requirements that include penalties for non-compliance.
Failure to Comply With Form D’s Filing Requirement
In the past, issuers were strongly encouraged to file Forms D in connection with Regulation D offerings, but no penalties were prescribed for those that failed to do so. The proposed rules would disqualify issuers that neglect to file the form from using Rule 506 exemption in any new offering for a period of one year after the date that the required Form D filings are omitted.
Prefiling of Form D
The SEC also proposes that issuers using general solicitation and advertising in Rule 506 offerings be required to file an advance notice of sale 15 days before the offering is opened, and a final notice within 30 days after completion of the offering. Presently, issuers relying upon Rule 506 offerings are required to file a notice of sales on Form D no later than 15 calendar days after the first sale of securities.
The SEC’s proposals require issuers to provide additional information in their Form D filing than before, including:
● identification of issuer’s website;
● expanded information about the issuer;
● securities offered;
● types of investors in the offering;
● use of proceeds from the offering;
● information on types of general solicitation used; and
● methods used to verify accredited investor status of investors.