These series of rules are cast under the collective rubric, Regulation D . It has been touted as providing legal certainty in areas where it previously had been non-existent. This oft-cited benefit has enhanced the capital formation capabilities of small businesses. If an issuer satisfactorily demonstrates that it has substantially complied with the requirements of Regulation D, the SEC and disgruntled investors are presumptively prevented from asserting a registration violation. The price for this comfort is not cheap.
Regulation D contains numerous stringent conditions, limitations and requirements.
A brief summary follows. Three of the eight rules comprising Regulation D set forth offering alternatives. These offering alternatives vary in terms of dollar size, disclosure requirements, the number and nature of permitted investors and the manner in which investors can be solicited. The remaining five rules in Regulation D set forth definitions and other terms and conditions of general application. Prior to the SEC's adoption of its small business initiatives , offerings under Rule 504 were subject to the general terms and conditions applicable to all Regulation D offerings, i.e., securities were subject to restrictions on transferability and could not be offered or sold by means of general solicitation or advertisement.