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SEC 2192 - Securities offerings under Regulation D
Publication date: 30 Jun 2023
us PwC SEC Volume 2192
.1 General
.11 What is Regulation D?
Regulation D establishes certain exemptions from the registration requirements of Section 5 of the Securities Act. Regulation D is set forth in Securities Act Rules 500-508 (available at https://www.ecfr.gov/current/title-17/chapter-II/part-230/subject-group-ECFR6e651a4c86c0174).
- Rule 504 of Regulation D provides an exemption for limited offers and sales of securities not exceeding $10 million during a 12-month period.
- Rule 506 of Regulation D provides an exemption for limited offers and sales without regard to the dollar amount of the offering.
The availability of these exemptions is subject to a number of conditions set forth in Regulation D (e.g., Rule 502, Rule 504(b) and Rule 506(b)). Issuers should refer to Regulation D and consider consulting with their legal counsel.
.12 Are there any SEC filing requirements associated with a Regulation D Offering?
Yes. An issuer relying on an exemption under Rules 504 or 506 are required to file a Notice of Exempt Offering of Securities on Form D with the SEC no later than 15 calendar days after the first sale of securities. If the end of that period falls on a Saturday, Sunday or holiday, then the due date would be the next business day. Form D must be filed with the SEC in electronic format by means of the SEC's Electronic Data Gathering, Analysis, and Retrieval System (EDGAR) in accordance with EDGAR rules set forth in Regulation S-T. See Securities Act Rule 503.
You can find the text of Form D at https://www.sec.gov/about/forms/formd.pdf.
See SEC 2192.901 and SEC 2192.902 for additional guidance.
.4 Disclosure requirements
.41 Where can I find the disclosure requirements (including financial statement requirements) applicable to a Regulation D offering?
The disclosure requirements (including the financial statement requirements) applicable to a Regulation D offering are specified in Securities Act Rule 502(b). The text of Rule 502(b) is available on Viewpoint under SEC Reporting / SEC Rules and Regulations / Selected Securities Act Rules.
The requirements vary depending upon a number of factors, including (i) the rule under which the securities are being sold, (ii) whether the securities are being sold to non-accredited investors, (iii) the amount (size) of the offering, (iv) whether the issuer is subject to the reporting requirements of Exchange Act Section 13 or 15(d) and (v) other factors described in Rule 502(b).
[Editor’s note: We understand that the SEC does not require a level of financial statement disclosure any higher than US GAAP for nonpublic entities in Regulation D offerings where the issuer has concluded that such disclosures are not material to investors.]
[Editor’s note: Issuers and auditors should evaluate the specific independence requirements to determine the appropriate auditor independence framework to apply (e.g., considering the amount of the offering).]
.9 Frequently asked questions
.901 Is a written accountants’ consent required in connection with a Regulation D offering?
No. Given that an offering under Regulation D is exempt from registration under the Securities Act and that there are no other specific requirements calling for a written consent, a Securities Act-style written consent is not required. However, the auditor may consider providing a letter similar to the letter referred to in PCAOB AI 26.17 or AU-C 945-A21. See SEC 2400.49 for additional information.
.902 Is “Experts” language required in a Regulation D offering?
No. See SEC 2300.16 for a discussion of “Experts” language in connection with a Regulation D offering statement.
PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
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