Regulation D Exempt Filings Securities

Regulation D is a set of rules promulgated by the U.S. Securities and Exchange Commission (SEC) pursuant to the federal Securities Act of 1933, which provides exemptions from federal securities registration for certain offers and sales of securities. Under Regulation D, three registration exemptions are contained in Rules 504, 505, and 506. Similar exemptions under the Illinois Securities Law of 1953 are Section 4.G, Section 4.D, and Section 2a, respectively.

All sales of securities are subject to the antifraud provisions of the securities laws. Any information provided to investors must be free from false or misleading statements and information should not be omitted if, as a result of the omission, the information provided to investors will be false or misleading.

An issuer must inform potential investors of any resale restrictions.

Felons and other "bad actors" are disqualified from involvement in Regulation D offerings. Issuers are required to determine whether the issuer or any of its covered persons has had a disqualifying event.

An issuer cannot advertise or attempt general solicitation of investors under these exemptions, except pursuant to Rule 506(c).

The SEC requires Form D filings be made electronically. The Illinois Securities Department will accept a paper copy of the electronic Form D that was filed with the SEC. Only a Form D for a Rule 506 offering can be submitted to the Illinois Securities Department electronically via the Electronic Filing Depository (EFD). For more information regarding the SEC's Form D electronic filing process, please visit the SEC's website. For more information regarding electronically filing a Form D for a Rule 506 offering with the Illinois Securities Department, please visit the EFD website.

Regulation D Rule 504 – Limited Offering Exemption

• Section 4.G of the Illinois Securities Law and Sections 130.440, 130.441 and 130.442 of the Rules and Regulations set forth the requirements of the Limited Offering Exemption available in Illinois. The requirements are similar to Rule 504
• In Illinois, all sales to Illinois residents within the immediately preceding 12-month period must have been made to not more than 35 persons or have involved an aggregate sales price of not more than $1,000,000.
• Section 4.G may be used in conjunction with Rule 504, provided there is no advertising or general solicitation of investors.
• Filing requirements include a Section 4.G Report of Sale or a copy of the Form D filed with the SEC and a check for the $100 filing fee made payable to the Illinois Secretary of State. Submit the Section 4.G Report of Sale or Form D and the check no later than 12 months after the date of the first sale to an Illinois resident. Please mail to:

  Illinois Securities Dept.
  421 E. Capitol Ave., 2nd Fl.
  Springfield, IL 62701

• Please note that if you are only filing with the Illinois Securities Department (and not with the SEC), you must submit a Section 4.G Report of Sale instead of a Form D.

Regulation D Rule 505 – Uniform Limited Offering Exemption (ULOE)

• Section 4.D of the Illinois Securities Law and Section 130.420 of the Rules and Regulations set forth the requirements of the Uniform Limited Offering Exemption (ULOE). This exemption must be used in conjunction with Rule 505. Please note that this exemption is only available until May 22, 2017 when Rule 505 will be repealed.
• The maximum offering amount is $5 million.
• Offerings pursuant to Rule 505 may be offered to an unlimited number of accredited investors. However, the offering cannot be sold to more than 35 non-accredited investors, regardless of residency.
• Filing requirements include a copy of the Form D filed with the SEC and a check for the $200 filing fee made payable to the Illinois Secretary of State. Submit Form D and the check within 15 days after the first sale of securities to an Illinois resident. Please mail to:

  Illinois Securities Dept.
  421 E. Capitol Ave., 2nd Fl.
  Springfield, IL 62701

• Please note that Form D must be filed with both the SEC and the Illinois Securities Department to qualify for the exemption.

Regulation D Rule 506(b) – Notification Filing

• Section 2a of the Illinois Securities Law and Section 130.293 of the Rules and Regulations set forth the notification filing requirements for a Rule 506(b) offering.
• There is no limit to the amount of money an issuer can raise or the number of accredited investors to whom securities can be sold.
• However, issuers cannot use general solicitation or advertising and cannot sell to more than 35 non-accredited investors, regardless of residency. (Please note that all non-accredited investors must meet the legal standard of having sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the investment.)
• Issuers must give non-accredited investors disclosure documents that generally contain the same information as provided in registered offerings.
• Filing requirements include a copy of the Form D filed with the SEC and payment of the $100 filing fee. Submit Form D and pay the filing fee within 15 days after the first sale of securities to an Illinois resident.
• Please electronically submit Form D and make an ACH payment via EFD. If you are unable to file electronically, you may mail Form D and a check made payable to the Illinois Secretary of State to:

  Illinois Securities Dept.
  421 E. Capitol Ave., 2nd Fl.
  Springfield, IL 62701

• Please note that Form D must be filed with both the SEC and the Illinois Securities Department to qualify for the exemption.

Regulation D Rule 506(c) – Notification Filing

• Section 2a of the Illinois Securities Law and Section 130.293 of the Rules and Regulations set forth the notification filing requirements for a Rule 506(c) offering.
• Issuers may offer securities through general solicitation, provided that all purchasers are accredited investors and the issuer takes reasonable steps to verify each purchaser's accredited investor status.
• Filing requirements include a copy of the Form D filed with the SEC and payment of the $100 filing fee. Submit Form D and pay the filing fee within 15 days after the first sale of securities to an Illinois resident.
• Please submit Form D and make an ACH payment via EFD. If you are unable to file electronically, you may mail Form D and a check made payable to the Illinois Secretary of State to:

  Illinois Securities Dept.
  421 E. Capitol Ave., 2nd Fl.
  Springfield, IL 62701

• Please note that Form D must be filed with both the SEC and the Illinois Securities Department to qualify for the exemption.

The Secretary of State, Illinois Securities Department or their information providers shall not be liable regardless of the cause or duration, for any errors, inaccuracies, omissions or untimeliness of the information, or for any delay or interruption in the transmission thereof to the user, or for any claims or losses arising therefrom.