Federal offering resources — educational, not legal advice

No limit on the amount raised. No general solicitation or general advertising (17 CFR 230.502(c)), which includes a seminar or meeting whose attendees were invited by general solicitation. Any number of accredited investors, and no more than 35 non-accredited purchasers in any 90-calendar-day period, each sophisticated alone or with a purchaser representative (230.506(b)(2)). Non-accredited purchasers must receive disclosure and financial statements at the Regulation A level, and a chance to ask questions (230.502(b)).

No limit on the amount raised, and general solicitation is allowed. Every purchaser must be accredited (230.501(a)), and the company must take reasonable steps to verify it (230.506(c)). The rule lists verification methods that are not the only ones allowed: IRS forms for two years with a written representation; asset and liability documents dated within three months plus a credit report; a written confirmation within three months from a registered broker-dealer, SEC-registered investment adviser, licensed attorney or CPA; or a representation from a person verified within the past five years (230.506(c)(2)(ii)).

SEC staff no-action letter, Latham & Watkins LLP (March 12, 2025): a company is viewed as having taken reasonable steps to verify when it requires a minimum investment of at least $200,000 from a natural person accredited under 230.501(a)(5) or (a)(6), at least $1,000,000 from an entity accredited under 230.501(a)(3), (7), (9) or (12), or at least $1,000,000, or $200,000 for each equity owner, from an entity accredited under 230.501(a)(8) because all its equity owners are; obtains written representations that the purchaser is accredited and that the minimum is not financed in whole or in part by any third party for the specific purpose of the investment; and has no actual knowledge of facts to the contrary. The minimum may be a binding commitment paid in installments as and when called. This is staff no-action relief, not a rule amendment. Sprowtt does not verify accreditation; the company does, and Sprowtt records the statements, the commitment and the company's confirmation.

For a natural person, the main tests are net worth over $1,000,000, alone or with a spouse or spousal equivalent, not counting the primary residence (230.501(a)(5)); or income over $200,000, or $300,000 jointly, in each of the two most recent years with a reasonable expectation of the same this year (230.501(a)(6)). Directors, executive officers and general partners of the company raising capital also qualify (230.501(a)(4)).

Sprowtt supports testing the waters: its Regulation A room collects indications of interest only, with no money taken and nothing sold.

Regulation A allows up to $20,000,000 in 12 months under Tier 1 and up to $75,000,000 under Tier 2 (17 CFR 230.251(a)). A company may test the waters, before and after it files its offering statement on Form 1-A, under Rule 255 (17 CFR 230.255). It may make no sale until the offering statement is qualified (230.251(d)).

Before qualification, no money or other consideration, and no commitment, binding or otherwise, may be solicited or accepted from anyone. Every testing-the-waters communication must say three things: that no money or other consideration is being solicited, and if sent in response will not be accepted; that no offer to buy can be accepted and no part of the purchase price received until the offering statement is qualified, and any such offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of its acceptance is given after qualification; and that an indication of interest involves no obligation or commitment of any kind.

After the offering statement is publicly filed, each communication must also say where the preliminary offering circular can be obtained, or give its web address, or include a copy. Material that later turns out to be materially inaccurate must be corrected and sent again. Rule 255 does not forbid stating the price per share, the valuation or the total amount the company expects to raise.

Form D is filed on EDGAR no later than 15 calendar days after the first sale in a Rule 506 offering, moving to the next business day when that day falls on a weekend or holiday. It is amended for material mistakes and changes, and every year while the offering continues (230.503).

Rule 506 is unavailable when a covered person, such as a director, executive officer, 20% voting holder, promoter or anyone paid to solicit purchasers, has a disqualifying event (230.506(d)). Events before September 23, 2013 do not disqualify but must be disclosed (230.506(e)). Regulation A has the parallel rule in 230.262.

Securities sold under Rule 506 are restricted: they cannot be resold without registration or an exemption (230.502(d)).