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Rule 506(b) |
506(c) |
Reg CF |
Permitted Investors |
Accredited investors and up to 35 non-accredited investors. As long as the non-accredited investors are “sophisticated.” |
Accredited investors only. |
Anyone |
Verification of Accredited Investors |
Verification of Issuer may rely on a statement by the investor to reach a reasonable belief that he, she, is accredited. |
The issuer must verify that investors are accredited, typically using a third party like Verifyinvestor. |
An issuer may rely on a statement by the investor to reach a reasonable belief that he, she is accredited. |
Dollar Limits |
· No limit on the amount raised· No limit on how much each investor can invest |
· No limit on the amount raised· No limit on how much each investor can invest |
· (i) The limit is $5M per year, and (ii) this limit applies to all issuers under common control· Investment amount limits for non-accredited investors based on income and/or net worth· No investment amount limits for accredited investors |
Total Number of Shareholders |
In general, any company with more than 500 non-investors or more than 2,000 total investors must become a full“reporting company” under the Exchange Act. |
In general, any company with more than 500 non-investors or more than 2,000 total investors must become a full“reporting company” under the Exchange Act. |
Unlimited if certain conditions satisfied |
Information Required |
· If the offering includes only accredited investors, no information is required by law, although we include information anyway to inform investors and avoid Rule 10b-5 liability.· If the offering includes even one non-accredited investor, the law requires that the issuer provide lots of information, |
No information is required by law, although we includeinformation anyway to inform investors and avoid Rule 10b-5 liability. |
The information must be submitted in the Form C. |
SEC Registration |
No |
No |
No |
State Registration |
No |
No |
No |
Pre-Sale Filings |
None |
None |
Form C |
Post-Sale Filings |
Form D to the SEC.Corresponding forms to each State where an investor lives. |
Form D to the SEC.Corresponding forms to each State where an investor lives. |
Same information as in initial filing to be filed yearly |
Advertising |
No advertising of actual deals permitted. Sales may be made only to investors with whom the issuer has a pre-existing relationship. |
Advertising of any kind is allowed. Internet, TV, radio, leaflets dropped from planes, anything. |
Unlimited advertising is allowed on the portal; advertising elsewhere is subject to restrictions. |
Sold Through Portals |
Permitted, but not required |
Permitted, but not required |
Required |