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What is the difference between Rule 147 and Rule 147A?

Posted on April 8, 2018 at 9:35 PM

 Rule 147A lifts the ban on general solicitation found in Rule 147. Issuers can use social media and other internet-based opportunities even if the actual sales of the issuer's securities can only be made in one state. Otherwise, Rule 147A is substantially identical to Rule 147 except that it allows issuers to be incorporated out-of-state.

This change means that a Delaware corporation that is headquartered in Texas can take advantage of Rule 147's exemption when raising funds from Texas residents What is the new Rule 504? The SEC's new Rule 504 increases the aggregate amount of securities that may be offered and sold in any 12-month period from $1 million to $5 million, allowing more flexibility in smaller, private securities offerings. However, a consequence of the SEC's rule changes may be that many states legislatures will have to revisit their intrastate crowdfunding statutes to take advantage of these changes.

There are exceptions for offers and sales made in accordance with specified types of state registration provisions and exemptions. In some states an offering can now be made to unaccredited investors. Note that all sales (not offerings) made under Rule 506(c must be made to only accredited investors. (The SEC also repealed the widely ignored Rule 505, which permitted offerings of up to $5 million annually sold solely to accredited investors or no more than 35 non-accredited investors).

The 34 states that enacted their own, intrastate statutes ahead of the SEC's rules can continue to rely on those statues.

Categories: S.E.C., New Capital Options, State securities regulation

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