Series 79: Rule 504: Exemption For Offerings Up To $5 Million

Rule 504: Exemption for Offerings Up to $5 Million

Rule 504 allows an exemption for certain small offerings made by non-reporting issuers. (Investment companies and shell or “blank check” companies, defined as development-stage companies with no specific business plan and issuers of penny stock, do not qualify for the exemption.) This exemption, sometimes called the “seed capital” exemption, is subject to the general conditions of Regulation D described previously.

The restrictions on general advertising and the limitation on resale do not apply to offers and sales made exclusively (1) in states that require registration and disclosure, (2) in at least one state that requires registration and disclosure if disclosure is made to all purchasers in every stat