Raising capital is an exciting milestone for any business, but it also comes with strict compliance requirements. Under Regulation D of the Securities Act, issuers must follow specific federal and state filing procedures to keep their offering legal and compliant. Missing these deadlines or requirements can lead to penalties or even loss of your exemption.
Below, we outline the three key steps you need to complete to file your securities filings.
Step 1: Obtain Your SEC Form ID
Before you can submit any offering details to the Securities and Exchange Commission (SEC), you need to secure a Form ID. This step registers your company in the SEC’s online filing system (EDGAR).
- Processing Time: The SEC may take up to 10 business days to approve your Form ID.
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Why it Matters: Securing a Form ID is the first step to filing your securities filings. You cannot file your Form D without this identification. Delaying this step could push back your entire offering timeline or cause you to miss the deadline to file your Form D.
Step 2: File Form D with the SEC
Once you have your Form ID, the next requirement is Form D—a short notice filed electronically with the SEC that provides basic information about your offering and the company issuing it.
- Deadline: Must be filed within 15 days of subscribing your first investor.
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Why it Matters: Filing your Form D timely ensures federal compliance and puts the SEC on notice about your offering. You cannot complete your Blue Sky filings without first filing Form D.
Step 3: Complete State “Blue Sky” Filings
In addition to federal filings, securities laws also require compliance at the state level. These filings, often referred to as Blue Sky filings, must be completed in every state where you have investors.
- One per State: Only one filing is required per state, but you’ll need to add new filings as investors from additional states come in.
- Deadline: Typically, within 15 days of subscribing an investor in that state.
- Goal: Satisfies state securities regulators and prevents state-level compliance issues.
Why Timely Filing Matters
Failing to follow these steps, or missing filing deadlines, can result in:
- Monetary penalties
- Enforcement actions
- Loss of your Regulation D exemption
- Inability to raise capital under Regulation D in the future
Conclusion: Protect Your Offering by Staying Compliant
Compliance under Regulation D is not just about having properly drafted documents and filing the right forms, it’s also about filing them on time. By securing your Form ID early, submitting your Form D promptly, and keeping up with state Blue Sky filings, you safeguard your offering and maintain investor confidence.
If you’re preparing to raise capital, our securities attorneys can guide you through every step of the process to ensure your offering remains compliant and secure. For personalized assistance, contact Kamden Crawford, Associate Attorney at Patel Law Group, at kcrawford@patellegal.com to get started.