SEC regulations permit a company to issue securities exempted from registration requirements of the Securities Act of 1933 under which of the…

The Securities Act of 1933 requires companies to register securities offerings with the SEC unless a specific exemption applies. Regulation D provides several "safe harbor" exemptions. Specifically, Rule 506(b) of Regulation D permits a company to raise an unlimited amount of capital in a private placement without registration. This exemption allows sales to an unlimited number of "accredited investors" but restricts sales to no more than 35 "non-accredited investors." If non-accredited investors are included, they must be sophisticated (have sufficient financial knowledge) and receive specific disclosure documents.

A. Regulation S provides an exemption for offerings sold outside of the U.S. Offerings sold inside the U.S. are subject to registration requirements, regardless of the purchaser's nationality.

B. The limit of 35 applies to non-accredited investors, not accredited investors. Rule 506(b) places no numerical limit on the number of accredited investors in an offering.

C. Certain exemptions, like Rule 504 of Regulation D, are limited to offerings below a certain aggregate price (e.g., $10 million). Exceeding a dollar threshold does not create an exemption.

1. U.S. Securities and Exchange Commission (SEC). "Rule 506 of Regulation D." This official SEC guidance states

"The company may sell its securities to an unlimited number of 'accredited investors' and up to 35 other purchasers." Available at: https://www.sec.gov/corpfin/rule-506-regulation-d

2. Code of Federal Regulations. "17 CFR § 230.506 - Exemption for limited offers and sales without regard to dollar amount of offering." Section (b)(2)(i) specifies the limitation on the number of purchasers: "The issuer shall reasonably believe that there are no more than 35 purchasers of securities from the issuer in any offering under this section." The definition of "purchaser" in Rule 501(e) excludes accredited investors from this count.

3. Cornell Law School Legal Information Institute (LII). "Regulation D (17 CFR §§ 230.501-508)." This academic resource provides the text and context for SEC regulations

confirming the structure of Rule 506

including the distinction between accredited and non-accredited investors and the 35-purchaser limit for the latter. Available at: https://www.law.cornell.edu/cfr/text/17/part-230/subpart-230.501etseq