What is form D?

If you're a founder looking to raise money for your business, you may be considering a “private offering” of securities (such as stocks or bonds). Simply put, this means that you are trying to get people to invest in your Company without registering your securities with the SEC (which takes a lot of time and costs a lot of money). If this is the case, you will probably want to file Form D with the Securities and Exchange Commission (SEC).

Guy Shahar
December 30, 2022

If this is the case, you may want to file Form D with the Securities and Exchange Commission (SEC).

What exactly is Form D (and why do you need to file it)?

Registering your securities is expensive and time consuming, so the SEC came up with Regulation D. Regulation D is a set of rules that exempt certain types of securities offerings from the registration requirements set forth in the Securities Act of 1933. And how does the SEC know that you are complying with Regulation D? You guessed it: Form D. That is why the form is so important. It lets the SEC know that your securities offering complies with Regulation D. It also reduces the amount of work that you will need to do to comply with state securities regulations (more on these coming in a future blog).

What’s in Form D? 

Form D includes information about your company, the securities being offered, the offering's terms and conditions, and the parties involved in the offering. It's important to note that Form D is not a disclosure document, so you don't need to include detailed financial information about your company. Instead, it's used to provide the SEC with notice of your offering and to ensure that it complies with federal securities laws.

When to file Form D?

You'll need to file Form D within 15 days of the first sale of securities in your offering. It's a fairly straightforward process, but it's important to make sure that you have all of the necessary information and that you file the form correctly to avoid any delays or issues. 

Form D alternatives:

But what if you're not quite ready to go through the process of filing a Form D? Since Form D is public, maybe you don’t want people knowing that you are raising money. Are there alternative ways to raise money?

Glad that you asked. One potential alternative is to rely on what those in the business call 4(a)(2). This exemption applies to private offerings of securities that are made to a limited number of sophisticated investors (typically angel investors and venture capitalists). 

It's important to note, however, that there are certain requirements that you must meet in order to rely on this exemption. For example, you'll need to be able to demonstrate that your investors are sophisticated and capable of evaluating the risks and potential rewards of the investment. You'll also need to ensure that you don't advertise or offer the securities to the general public, as this would disqualify you from the exemption. Finally, you will need to make sure that you are complying with all state regulatory requirements (remember - Form D is just a federal requirement). 

No matter the ways in which you are considering to raise money, it's a good idea to consult with a lawyer or other professional to ensure that you're in compliance with the requirements and that you're taking the appropriate steps to protect your business and your investors. Compliance may take a little bit of extra time and effort, but it's worth it to ensure that you follow the law and don’t have any red flags down the road.

DISCLOSURE: This article does not constitute legal advice and should not be relied upon for business or legal decisions. Blee is not a law firm, or a substitute for an attorney or law firm. Blee is not liable for any damages arising from the use of or inability to use our service, product, or any material contained in it, or from any action or decision taken as a result of using our product or service. If you need legal or tax advice, you should consult an attorney or tax professional in your geographic area.

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