Direct Public Offering: Regulation D - 3
Description
This article is from the Investing Articles: Public Offerings: IPO and DPO series.
Direct Public Offering: Regulation D - 3
Note 1: A person acting as a purchaser representative should consider the applicability of the registration and antifraud provisions relating to brokers and dealers under the Securities Exchange Act of 1934 ("Exchange Act") [15 U. S. C. 78a et seq., as amended] and relating to investment advisers under the Investment Advisers Act of 1940.
Note 2: The acknowledgment required by paragraph (h)(3) and the disclosure required by paragraph (h)(4) of this 230.501 must be made with specific reference to each prospective investment. Advance blanket acknowledgment, such as for "all securities transactions" or "all private placements," is not sufficient.
Note 3: Disclosure of any material relationships between the purchaser representative or his affiliates and the issuer or its affiliates does not relieve the purchaser representative of his obligation to act in the interest of the purchaser.
Reg. 230.502. The following conditions shall be applicable to offers and sales made under Regulation D (230.501-230.508):
(a) Integration. All sales that are part of the same Regulation D offering must meet all of the terms and conditions of Regulation D. Offers and sales that are made more than six months before the start of a Regulation D offering or are made more than six months after completion of a Regulation D offering will not be considered part of that Regulation D offering, so long as during those six month periods there are no offers or sales of securities by or for the issuer that are of the same or a similar class as those offered or sold under Regulation D, other than those offers or sales of securities under an employee benefit plan as defined in Rule 405 under the Act [17 CFR 230.405].
Note: The term "offering" is not defined in the Act or in Regulation D. If the issuer offers or sells securities for which the safe harbor rule in paragraph (a) of this 230.502 is unavailable, the determination as to whether separate sales of securities are part of the same offering (i.e. are considered "integrated") depends on the particular facts and circumstances. Generally, transactions ot erwise meeting the requirements of an exemption will not be integrated with simultaneous offerings being made outside the United States in compliance with Regulation S. See Release No. 33-6863. [Amended in Release No. 33-6437 (72,407), effective December 4, 1982, 47 F.R. 54764; and Release No. 33-6863 (84,524), effective May 2, 1990, 55 F.R. 18306.]
The following factors should be considered in determining whether offers and sales should be integrated for purposes of the exemptions under Regulation D:
(a) Whether the sales are part of a single plan of financing;
(b) Whether the sales involve issuance of the same class of securities; > (c) Whether the sales have been made at or about the same time;
(d) Whether the same type of consideration is received; and
(e) Whether the sales are made for the same general purpose. See Release No. 33-4552 (November 6, 1962) (27 FR 11316).
(b) Information requirements.
(1) When information must be furnished.
If the issuer sells securities under 230.505 or 230.506 to any purchaser that is not an accredited investor, the issuer shall furnish the information specified in paragraph (b)(2) of this section to such purchaser a reasonable time prior to sale. The issuer is not required to furnish the specified information to purchasers when it sells securities under 230.504, or to any accredited investor.
Note: When an issuer provides information to investors pursuant to paragraph (b)(1), it should consider providing such information to accredited investors as well, in view of the anti-fraud provisions of the federal securities laws. [Amended in Release No. 33-6825 (84,404), effective April 19, 1989, 54 F. R. 11369; and Release No. 33-6961 (85,047), effective November 16, 1992, 57 F.R. 47408.
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