Form D Federal Exemptions and Exclusions

Most Common Exemptions:

Regulation D Rule 504(b)(1) (not (i), (ii), or (iii)): This exemption applies under the Securities Act of 1933 for the offer and sale of up to $5,000,000 of securities in a 12-month period. This exemption is applicable where the conditions of 17 C.F.R. §§ 230.501 and 230.502(a), (c), and (d) are satisfied.

The following companies are not eligible to use this exemption: (1) companies that already are Exchange Act reporting companies (i.e., public companies), (2) investment companies, (3) 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 (e.g., SPACs), and (4) companies that are disqualified as a "bad actor." Bad actors are issuers or other otherwise "covered persons" who have experienced a disqualifying event, such as being convicted of or sanctioned for securities fraud or other violations of specified laws.

Less Common Exemptions:

Regulation D Rule 504(b)(1)(i): Offers and sales of securities that are made exclusively in one or more states that provide for the registration of the securities, require the public filing and delivery to investors of a substantive disclosure document before sale, and are made in accordance with those state provisions are exempt under this rule. 

Regulation D Rule 504(b)(1)(ii): Offers and sales of securities that are made in one or more states that have no provision for the registration of the securities or the public filing or delivery of a disclosure document before sale, if the securities have been registered in at least one state that provides for such registration, public filing, and delivery before sale, offers and sales are made in that state in accordance with such provisions and the disclosure document is delivered before sale to all purchasers, including those in the states that have no such procedure, are exempt under this rule. 

Regulation D Rule 504(b)(1)(iii): Offers and sales of securities that are made exclusively according to state law exemption from registration that permit general solicitation and general advertising so long as sales are made only to "accredited investors," who are any person who falls within any of the following categories or whom the issuer reasonably believes falls within any of the following categories at the time of sale of securities to that person: banks, private business development companies, any organization not formed for the specific purpose of acquiring the securities offered with total assets in excess of $5,000,000, any director, executive officer, or general partner of the issuer or a general partner of that issuer of the securities being offered or sold, any person whose individual net worth (or joint net worth with their spouse) exceeds $1,000,000, are exempt under this rule. 

Regulation D Rule 506(b): This exemption applies where offers and sales satisfy all the terms and conditions of 17 C.F.R. §§ 230.501, 230.502. Accredited investors engaging in an offer or sale which is not integrated nor available for resale, where the information material to the understanding of a reasonable investor is furnished, are exempt under this rule. 

Regulation D Rule 506(c): This exemption applies where offers and sales satisfy all the terms and conditions of 17 C.F.R. §§ 230.501, 230.502(a) and (d). Accredited investors engaging in an offer or sale which is not integrated nor available for resale are exempt under this rule.

Securities Act Section 4(a)(5): This exemption applies when the total offering price is less than $5,000,000 and no public solicitation or advertising is made.

Investment Company Act Section 3(c)(1): When you are an issuer whose outstanding securities (other than short-term paper) are beneficially owned by not more than 100 people (250 people in the case of a qualifying venture fund) and do not make nor presently propose to make a public offering of your securities, this exemption applies.

Investment Company Act Section 3(c)(2): When you are primarily engaged in the business of underwriting and distributing securities issued by other people, selling securities to customers, acting as a broker, or acting as a market intermediary and your gross income normally is derived principally from such business and related activities, this exemption applies.

Investment Company Act Section 3(c)(3): When you qualify as any of the following, this exemption applies: bank, insurance company, savings and loan association, building and loan association, cooperative bank, homestead association, receiver, conservator, liquidator, liquidating agent, common trust fund or similar fund maintained by a bank exclusively for the collective investment and reinvestment of moneys contributed thereto by the bank in its capacity as trustee, executor, administration, or guardian.

Investment Company Act Section 3(c)(4): If your whole business is confined to making small loans, industrial banking, or similar businesses, this exemption applies.

Investment Company Act Section 3(c)(5): If you are not engaged in the business of issuing redeemable securities or face-amount certificates of the installment type or periodic payment plan certificates, and are primarily engaged in one or more of the following businesses: purchasing/acquiring notes, drafts, acceptances, open accounts receivable, and other obligations representing part or all of the sales price of merchandise, insurance, and services; making loans to manufacturers, wholesalers, and retailers of, and to prospective purchasers of specialized merchandise, insurance, and services; and purchasing or otherwise acquiring mortgages and other liens on and interests in real estate, this exemption applies. 

Investment Company Act Section 3(c)(6): If you are primarily engaged, directly or through majority-owned subsidiaries, in one or more of the businesses described above together with an additional business other than investing, reinvesting, owning, holding, or trading in securities, this exemption applies.

Investment Company Act Section 3(c)(7): If you're an issuer of securities owned by qualified purchasers, and do not make/do not propose to make a public offering at the time of acquisition, this exemption applies.

Investment Company Act Section 3(c)(9): If substantially all of your business consists of owning or holding oil, gas, or other mineral royalties or leases, including certificates of interest or participation in or investment contracts relative to such royalties, leases, or fractional interests, this exemption applies.

Investment Company Act Section 3(c)(10):  If your entity is organized and operated exclusively for religious, educational, benevolent, fraternal, charitable, or reformatory purposes and none of its net earnings inures to the benefit of any private shareholder or is or maintains a fund, this exemption applies.

Investment Company Act Section 3(c)(11): The following do not count as investment companies: an employee's stock bonus, pension, or profit-sharing trust which lets the requirements for qualification; a governmental plan; a collective trust fund maintained by a bank consisting solely of assets of one or more of such trusts, government plans, or church plans; a separate account of which the assets are derived solely from a contributions under pension or profit-sharing plans which meet the requisite requirements, contributions under governmental plans in connection with which interests, participations, or securities; and advances made by an insurance company in connection with the operation of such separate account. These are not required to file a Form D, and this exemption applies.

Investment Company Act Section 3(c)(12): Any voting trust, the assets of which consist exclusively of securities of a single issuer which is not an investment company qualifies under this exemption.

Investment Company Act Section 3(c)(13): Any security holders' protective committee or similar issuer having outstanding and issuing no securities other than certificates of deposit and short-term paper qualifies under this exemption.

Investment Company Act Section 3(c)(14): Any church plan, if under any such plan, no part of the assets may be used for, or diverted to, purposes other than the exclusive benefit of plan participants or beneficiaries, including any company or account that is established by a person eligible to establish and maintain such a plan, qualifies under this exemption.

PaperOS is not an attorney or a law firm, and can only provide self-help services at your specific direction. Do not rely on any documents or information from PaperOS without consulting an attorney. PaperOS may partner with or refer clients to licensed attorneys, but such referral does not constitute an attorney-client relationship until the attorney is officially engaged by the client.