Regulation D is a framework for raising investment capital through an exempt securities offering. The exemption addresses registration requirements. Your company still needs a clear investment proposition, accurate disclosures, eligible purchasers, and a process for accepting investments.
For issuers evaluating Issuance, the central choices are Rule 506(b) and Rule 506(c). Both can support an online investment process, but they impose different rules on how you find investors.
What Regulation D covers
Regulation D includes Rule 504, Rule 506(b), and Rule 506(c). This guide focuses on the two Rule 506 routes that Issuance supports. Rule 506 offerings have no federal dollar cap. The rules govern the offering exemption rather than prescribing a particular security or business model. Your counsel must evaluate the security, issuer, and complete transaction. The SEC’s exempt offering FAQ explains how these exemptions fit within the securities laws.
This distinction matters when planning a raise. Choosing preferred stock, a convertible note, or another instrument does not itself determine whether public advertising is allowed. The exemption and the circumstances of the offering do.
The first decision is how you will reach investors
Rule 506(b) prohibits general solicitation. It permits unlimited accredited investors and up to 35 non-accredited purchasers in any 90-calendar-day period, subject to the rule’s counting provisions. Non-accredited purchasers must meet a financial sophistication standard, alone or with a purchaser representative, and receive specified information before investing.
Rule 506(c) permits general solicitation. Every purchaser must be accredited, and the issuer must take reasonable steps to verify that status. A campaign can reach a wide audience while its actual purchaser pool remains limited.
Start with the audience you can realistically reach. A defined group of existing investor relationships creates different planning questions from an advertising campaign directed at people who have never heard of your company. Resolve that difference before anyone publishes an investment invitation.
Exempt does not mean undisclosed
The federal antifraud provisions apply to exempt offerings. Material misstatements and omissions can create liability even when the company has no obligation to file a public prospectus.
Build one consistent explanation of the business, use of proceeds, security terms, material risks, conflicts, and financial condition. Reconcile the financial figures across the subscription documents, presentation, investor emails, and offering page. If a projection depends on opening five locations, explain that assumption alongside the projection.
A polished checkout cannot resolve conflicting statements about what investors are buying. Treat disclosure preparation as part of offering design.
The obligations continue through the offering
Rule 506 offerings require a Form D notice within 15 days after the first sale. Federal preemption of state registration leaves state notice filings and fees in place. Investors receive restricted securities. These shared requirements appear in the SEC’s Rule 506 explanations.
The bad actor rules also require attention before sales. Covered persons include more than the founder, such as certain officers, directors, 20% voting owners, promoters, and paid solicitors. Counsel can establish an inquiry process and assess any relevant events, exceptions, waivers, or disclosure duties.
Assign an owner to each task. Your investment records should distinguish a started application, a signed document, the legally relevant sale date, and funds received. Those events need not occur together.
A hypothetical planning example
A fictional equipment company wants to raise $4 million. Its founders have several established investor relationships, but its marketing agency proposes public social media advertisements for the round.
The amount alone does not decide between 506(b) and 506(c). The team must decide whether to keep the offering within a compliant private solicitation process or use public outreach and restrict purchases to verified accredited investors. If non-accredited investors are central to the plan, the team needs a separate discussion about eligibility, disclosure, and other possible exemptions.
This example illustrates planning questions. It is not an exemption determination or a fundraising forecast.
How Issuance fits
Issuance’s platform supplies branded offering pages, investor checkout, electronic signatures, and an issuer dashboard with investment and screening information. That gives your team a place to operate the investment process after it has established the offering’s requirements.
Issuance is a technology provider. Your company leads investor outreach and works with its securities counsel and chosen partners. The issuer and its designated filing professionals remain responsible for Form D and applicable state notices.
For a community offering under Regulation Crowdfunding, visit Issuance Express, the separate funding portal subsidiary.