SEC Issues Further Guidance on Rule 506 of Regulation D

Last year, the Securities and Exchange Commission (“SEC”) amended Regulation Dof the Securities Act of 1933 (the “Securities Act”), by adding Rules 506(c), 506(d) and 506(e).  As we have described previously, there are several considerations and requirements of Rule 506(d).  In an effort to further clarify these rules, the SEC’s Division of Corporation Finance publishes updates to the Securities Act Rules Compliance and Disclosure Interpretations(“C&DIs”) section of their website titled Questions and Answers of General Applicability.  This resource presents the SEC’s views, general guidance and interpretations of these and other rules adopted under the Securities Act. On January 3, 2014, the SEC provided new guidance, in a release, that includes interpretation on the following five (5) topics:

  • Determining whether a shareholder that becomes a 20% beneficial owner is considered a covered person at the time of each sale of securities
  • Interpreting the term “beneficial owner” under Rule 506(d)
  • When to “Look through” entities in regards to direct and indirect beneficial ownership
  • Shareholder voting agreements and their effects on 20% beneficial owners
  • Waiving disclosure obligations set forth in Rule 506(e)

For further information on this and other related subjects, please contact us at or (619) 298-2880.

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