By: Heidi Abdul, Corporate Consultant

Whether you own a startup or you’re a private equity investor looking to fund a company from the ground up, the expense (both time and money) of registering an offering with the SEC can seem daunting. That’s where Regulation D comes into play…. this set of rules (commonly referred to as Reg D) describes the qualifications companies must meet to be exempt from SEC registration, giving startups and investors the opportunity to take part in private securities transactions without registering them through the SEC. Reg D is essentially a cost-effective and efficient tool for companies and investors looking to maximize early-stage funding, but it does take careful planning due to Reg D’s specific requirements and timelines.


While Reg D allows investors and startups to have a safe harbor for a private offering of securities under the federal statutes (the 1933 Act and the 1934 Act), companies can’t just start selling securities and claim Reg D exemption after the fact. A successful Reg D offering takes careful planning and strategic guidance. You can avoid pitfalls by planning ahead and working with experts that have completed many Reg D offerings.

The three main timeline considerations to take into account are (i) filing your Form D, (ii) state regulations (as applicable), and (iii) drafting your offering documents and strategic considerations relating to the type of Reg D exemption you are using (Rule 504, or 506(b) or 506(c)). (Note: this article does not discuss general solicitations under Rule 506(c), which we may cover in another blog article!).

Regardless of which state your offer takes place in or the type of exemption, all companies using Reg D must file Form D with the SEC, a notice of the sale of unregistered securities, within 15 days after the first sale. This form identifies key information needed for the offer of securities, including:

  • Issuer
  • Promoters
  • Beneficial owners
  • Officers
  • Directors
  • Partners
  • Type of exemption
  • Type of securities offered
  • Details of the use of proceeds

Even though you have 15 days after the first Reg D security sale to file Form D, this is something you should plan for ahead of the first sale. When you’re getting close to the final offering stage, you should also be working on and finalizing Form D. There are a few steps to register online through the SEC’s system (known as EDGAR) that can take some time. If you wait until the last minute, you’re more likely to miss that 15-day deadline.

Although Reg D exemptions mean you don’t need to register the transaction as a public offering of securities under the 1933 Act , you may still need to comply with state timelines and securities regulations (aka Blue Sky Laws) depending on the type of Reg D exemption your offer falls under. Not all states have regulatory requirements and those that do vary from state to state; consult with a professional to see which specific timelines apply to your securities transaction (of course, we’re here to help!).

Finally, you’ll want to work with your securities attorney in planning a timeline for drafting of the private placement memorandum, risk factors, and other offering documents, which will vary and be impacted by the type of Reg D offering you are pursuing. Overall, the deadlines for Reg D aren’t too restrictive for your private securities transaction as long as you plan ahead.


If you’ve read this far, you’re probably thinking Reg D sounds like a great funding option for your next offering. But, the Reg D rules contain specific guidelines on eligibility that your company will need to comply with to take advantage of the safe harbors. Rules 504 and 506 list certain companies and investors that are not eligible for Reg D exemptions.

Under Rule 504, the offering may not exceed an aggregate of $5,000,000, and the following companies are not eligible:

  • Exchange Act reporting companies
  • investment companies
  • companies that have no specific business plan or have indicated their business plan is to engage in a merger or acquisition with an unidentified company or companies
  • companies that are disqualified under “bad actor” provisions

Rule 506(b) is the most widely used Reg D offering exemption and is generally known as the private offering safe harbor. Companies using this exemption can raise an unlimited amount from an unlimited number of accredited investors. Similar to Rule 504, companies disqualified under “bad actor” provisions are not eligible for Reg D exemptions. The primary consideration for companies using Rule 506(b) is ensuring that all of your investors are accredited investors as defined in Rule 501 of Reg D. If your investors are not accredited by one or more of the factors identified in Rule 501, then you will lose the safe harbor protection of Rule 506(b).

In a nutshell, planning ahead and working with experienced securities counsel is critical to ensure your Reg D private securities transaction falls within the appropriate safe harbor and is compliant with federal securities laws. You can connect with experienced outsourced General Counsel at Auxana, who will be able to help you start the process of strategically planning for your Reg D offering.


Regulation D is a great safe harbor and technical tool when used appropriately in your private offering way to fund your startup. In fact, it is the norm for privately funded startups. We can help you get started with your Reg D offering in terms of planning, budgeting, and engaging with an experienced securities attorney to complete your offering documents. We can help you keep your costs low as you raise money for your idea and new venture!

Regulation D can help bring opportunities to life in an efficient way that benefits both investors and business owners. With over 25 years of experience in this field, I can help you navigate the planning, timeline, cost, and compliance of Regulation D private securities offerings and purchases, taking you from an opportunity to a completed funding. Contact us for more information!

DISCLAIMER: This blog does not contain or constitute legal advice and we are not a law firm nor will we provide legal advice. Auxana Inc. is not a law firm, does not provide any legal services, any legal advice, explanation, opinion, or recommendation about possible legal rights, remedies, defenses, options, or any lawyer referral services, and does not provide or participate in any legal representation.