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Reminders for Issuers That Intend to Use General Solicitation

Publisher: Morrison & Foerster LLP
Author: Anna T. Pinedo and David M. Lynn

Privately held operating company issuers (as distinguished from private funds) should plan ahead if they intend to use general solicitation for Rule 506(c) offerings after September 23, 2013. Here is a preview of the considerations that issuers may want to keep in mind:

  • From the outset, obtain all of the information required to identify whether there are any bad actor disclosures that are required to be made in connection with a Rule 506 offering, and if so, determine how and when those disclosures will be made to investors.
  • Determine whether you will structure your offering as a Rule 506(c) offering (using general solicitation, and no non-accredited investors) or a Rule 506(b) offering. This decision should be made taking into account the company’s overall funding strategy. If the offering will be structured as a Rule 506(c) offering, is there a “finite” offering period, or will the issuer be engaged in a continuous effort to raise funds over a period of time?

For the full list of reminders for issuers, click here for more details.

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