What is a 506 fund?
Rule 506(b) is part of Section 4(a)(2) in the Securities Act of 1933, which outlines rules companies or investors must follow to sell securities in a private offering. 506(b)'s defining feature: A GP can raise an unlimited amount of money as long as they do not publicly advertise or solicit investments for the fund.
Is there a cap on the amount that can be raised using Rule 506?
Rule 506 of Regulation D provides two distinct exemptions from registration for companies when they offer and sell securities. Companies relying on the Rule 506 exemptions can raise an unlimited amount of money.
Can you change from 506b to 506c?
In the release, the Commission specifically observed that this means an issuer conducting a Rule 506(b) offering can switch to Rule 506(c) so long as any sales made after the switch are only to accredited investors whose status the issuer has taken reasonable steps to verify.
What is the bad actor rule?
This rule, a product of the JOBS Act, became effective on September 23, 2013 and is the original source of the Bad Actor Rule. The Bad Actor Rule prohibits an issuer from relying on the exemption if the issuer or certain other persons are subject to certain Disqualifying Events including being convicted of, or ...
Companies that comply with the requirements of Rule 506(b) or (c) do not have to register their offering of securities with the SEC, but they must file what is known as a "Form D" electronically with the SEC after they first sell their securities. Form D is a brief notice that includes the names and addresses of the company’s promoters, executive officers and directors, and some details about the offering, but contains little other information about the company. You can access the SEC’s