Unregistered Securities Offerings: Choosing the Appropriate Exemption; Documents and Disclosures; Recent Trends

An unregistered offering is the offer and sale of securities in a transaction that is not registered with the SEC in reliance on an exemption from registration under the Securities Act of 1933. Securities offerings continue to be a key source of financing for companies, and most companies choose to issue securities in private placements in order to avoid the time and expense of the registration process. However, most of the registration exemptions allowing for private placements also limit the kinds of purchasers who may participate in these sales.

The most common registration exemption is Regulation D, promulgated (largely) under Section 4(a)(2) of the Securities Act, most notably its safe harbors Rule 506(b) and Rule 506(c). Companies can also use Section 4(a)(2) itself, which can lead to confusion regarding the difference between these exemptions. Two other important exemptions are Regulation S and Regulation A.

There are several steps involved when conducting an unregistered/private placement offering. These steps include determining the type of offering that best meets the client's fundraising needs and goals; drafting the offering documents (including the private placement memorandum, if applicable) and other disclosures; determining the accredited investor status of the investors; filing the notice of exempt offering (Form D) with the SEC; complying with state securities laws; conducting the offering by marketing and selling securities to investors; closing the transaction; and providing ongoing disclosures if required.

Listen as our authoritative panel of securities attorneys takes you through the steps in conducting an unregistered/private placement offering. The panel will provide updates on the latest trends and rules governing private securities offerings and offer practical tips and guidance for each step of the process.