Dictionary › Dilution & financing
Regulation D and Form D
Also called: Reg D, Form D, Rule 506(b), Rule 506(c), Rule 504, exempt offering
The SEC rules that let companies sell securities privately without registering them, and the short notice (Form D) they file after the first sale.
Explanation
Regulation D offers safe harbors from registration. Rule 506(b), the most used, allows an unlimited amount to be raised from accredited investors (plus up to 35 sophisticated non-accredited ones) as long as there is no general solicitation. Rule 506(c) allows public advertising, but every buyer must be accredited and the company must take reasonable steps to verify it. Rule 504 covers up to $10 million in 12 months.
Form D is a brief notice filed with the SEC within 15 days after the first sale. It lists the exemption claimed, the total offering amount, how much has been sold, the number of investors, sales commissions and any proceeds paid to executives. It does not describe the price or terms in detail.
Securities sold under Regulation D are restricted: buyers cannot resell them freely until they are registered for resale or a Rule 144 holding period has passed.
Why it matters
A Form D is often the only public trace of a private raise at a small company, and it can appear before the 10-Q that explains the deal. At a public company it usually accompanies a PIPE.
How Equity Dictionary measures it
Form D filings appear in the offerings timeline. An 8-K, a prospectus and a Form D filed within 15 days of each other are treated as one deal, so a single raise is not counted three times in the financing-activity factor.
Related terms
- Private investment in public equity (PIPE): A sale of unregistered stock, convertibles or warrants by a public company directly to selected investors, who usually get the shares registered for resale afterwards.
- Form 8-K: The current report a company must file within four business days of a major event, organized into numbered items.
- Registered direct offering (RDO): A sale of registered shares negotiated directly with a few institutional investors through a placement agent, usually at a discount and closed within a day or two.
- Warrants: Contracts issued by a company that let the holder buy new shares at a fixed exercise price until an expiry date, often five years out.
Plain-English summary for research; not legal or investment advice.