Regulation D 506(b)
Regulation D 506(b) lets a company raise unlimited capital privately from investors it already knows, with no general solicitation and self-certified accreditation.
Raise unlimited capital privately from investors you already know — no general solicitation, self-certified accreditation.
What You Get
- ✓No cap on the raise amount
- ✓Self-certification of accredited status
- ✓Up to 35 sophisticated non-accredited investors
- ✓No general solicitation or advertising
Built Into Every Deal
Flat-fee engagement. Directly Listed charges a flat platform fee plus an equity grant at signing — quoted individually for every deal. No percentage-of-raise surprises.
eSignature execution. Subscription agreements and engagement letters are executed through Adobe Acrobat Sign with full audit trails.
Payments. Funds are handled directly from investors to the issuer — by card for amounts under $5,000, or by ACH or wire transfer straight to the issuer's bank account. Directly Listed never holds the funds.
Issuer-exemption model. Directly Listed is a technology platform; offerings are conducted by issuers in reliance on their own exemptions, with compliance workflows — accreditation, investor limits, KYC — built into the software.
Flat Fee Disclosure
Our SEC-licensed attorneys, consultants, and listing advisors are all paid out of the flat fee we charge. There are no separate legal bills—only third-party costs, such as legal opinions, valuation reports, audits, transfer agent and DTC fees, exchange application fees, and any annual exchange fees.
The flat fee is determined by the scope of services provided and your company's stage, along with an equity grant that is likewise set according to your startup's stage and needs. Every deal is quoted individually.
Understanding Rule 506(b)
Rule 506(b) is a Regulation D safe harbor under Section 4(a)(2) that lets issuers raise unlimited capital privately — without general solicitation — from an unlimited number of accredited investors and up to 35 sophisticated non-accredited investors.
At a glance
- ✓Unlimited raise amount
- ✓No general solicitation or advertising
- ✓Unlimited accredited investors + up to 35 sophisticated non-accredited
- ✓Lower bar — a reasonable belief of accredited status
- ✓Securities are restricted; bad-actor rules apply
- ✓File Form D within 15 days of the first sale
Non-accredited participants
Any non-accredited purchaser must be financially sophisticated — possessing the knowledge and experience to evaluate the investment, or represented by a purchaser representative who does. When non-accredited investors participate, the issuer must provide disclosure documents comparable to those in a registered or Regulation A offering, including specified financial statements that in some cases must be audited, and must be available to answer questions.
Verifying investors
For accredited investors, the issuer needs only a reasonable belief that the purchaser is accredited — a lighter burden than Rule 506(c). Issuers commonly document that belief through investor questionnaires, representations, and supporting documentation where appropriate.
Practical posture
Securities sold under 506(b) are typically restricted (subject to Rule 144 resale limits), and the offering remains subject to Regulation D bad-actor disqualification. Prudent issuers rely on robust onboarding, clear documentation of sophistication or accredited status, careful disclosure packages for any non-accredited participants, and thorough bad-actor due diligence.
This summary is provided for general information only and is not legal, tax, or investment advice. Offerings are conducted by issuers in reliance on their own exemptions; confirm current requirements with qualified counsel.
Regulation D 506(b), in depth
Rule 506(b) is a safe harbor under Regulation D, built on Section 4(a)(2) of the Securities Act of 1933. It permits an unlimited raise — no dollar ceiling, unlike Regulation A+ ($75M) or Rule 504 ($10M) — from an unlimited number of accredited investors plus up to 35 sophisticated non-accredited investors in any 90-day period. Accreditation runs on a reasonable-belief standard: a signed investor questionnaire, not tax returns or third-party verification. Admitting even one non-accredited investor triggers registered-offering-style disclosure, which is why most rounds run accredited-only.
The defining restriction is no general solicitation. The raise cannot be publicly advertised — no social posts, mass emails, or open pitch events — only investors with a pre-existing, substantive relationship. In exchange, Rule 506 offerings are covered securities that preempt state blue-sky registration; only state notice filings and fees remain. Form D is due on EDGAR within 15 days of the first sale. The securities issued are restricted under Rule 144, with holding periods before resale. Cross-border rounds often pair 506(b) with a Regulation S offshore tranche, and the SEC's integration safe harbors govern how it sits alongside other offerings.
506(b) suits founders raising a seed, SAFE, or growth round quietly from a known network — it is the workhorse behind most U.S. private raises. Directly Listed scopes each deal as a flat platform fee plus an equity grant and sequences the round toward a NASDAQ or NYSE direct listing, with an ELOC or PIPE for follow-on capital.
Related topics: Regulation D 506(c) · Regulation S · Section 4(a)(2) · Issuer FAQ
Regulation D 506(b) — questions & answers
What is Regulation D 506(b), and why should business owners care?
Rule 506(b) is the most widely used way for private companies to raise capital in the United States without registering the offering with the SEC. It's a safe harbor under Regulation D that lets you sell securities — equity or debt — to an unlimited number of accredited investors and up to 35 non-accredited investors, with no cap on how much you raise, as long as you don't publicly advertise the offering. It's flexible, relatively low-cost, imposes no dollar ceiling, and doesn't require you to formally verify each investor's wealth. The main catch: you generally must raise from people you already have a relationship with. For most founders raising a friends-and-network or seed round, 506(b) is the default tool.
Related topics: Regulation D 506(c) · Regulation S · Section 4(a)(2) · Issuer FAQ
Can I raise money from non-accredited investors under 506(b)?
Yes, but only in a limited way — 506(b) permits up to 35 non-accredited investors in any 90-day period, and those investors must be sophisticated, meaning they have enough financial and business knowledge to evaluate the risks and merits of the investment, on their own or through a purchaser representative. Including any non-accredited investor triggers a much heavier disclosure obligation: you must give them detailed, registered-offering-style information about the company and its financials. That added burden is why many founders, despite being allowed up to 35 non-accredited investors, structure their rounds as accredited-only — it's simpler and cheaper. So the honest answer is yes, you can include them, but doing so meaningfully raises your disclosure and compliance load.
Related topics: Regulation D 506(c) · Regulation S · Section 4(a)(2) · Issuer FAQ
What's the difference between Rule 506(b) and 506(c)?
The core difference is advertising versus verification. Under 506(b), you cannot engage in general solicitation — no public advertising, mass emails, or social-media blasts — and you must generally rely on pre-existing relationships; in exchange, you don't have to formally verify accreditation and you may include up to 35 sophisticated non-accredited investors. Under 506(c), you can advertise the offering publicly, but every purchaser must be accredited and you must take reasonable steps to verify each one's status — tax returns, bank statements, or third-party confirmations. Both allow unlimited raises and both preempt state registration. Choose 506(b) to raise quietly from a known network with lighter verification; choose 506(c) to advertise publicly with every investor accredited and verified.
Related topics: Regulation D 506(c) · Regulation S · Section 4(a)(2) · Issuer FAQ
Can I publicly advertise my raise under 506(b)?
No — this is the single most important restriction in 506(b): you cannot use general solicitation or general advertising to market the offering. That means no public roadshows, no social-media posts promoting the raise, no mass emails to strangers, and no posting the deal on a public website open to anyone. You must raise from investors with whom you, or someone acting for you, have a pre-existing, substantive relationship. Note the distinction: you can advertise your company and products in the ordinary course — the prohibition covers publicly advertising the securities offering itself. If you want to advertise the raise to the broad public, you need Rule 506(c), which allows advertising but requires verifying that all investors are accredited. Blurring this line is one of the most common and dangerous 506(b) mistakes.
Related topics: Regulation D 506(c) · Regulation S · Section 4(a)(2) · Issuer FAQ
What is a Form D filing, and when do I need it?
Form D is a brief electronic notice you file with the SEC on EDGAR to report that you've conducted an exempt offering under Regulation D. It covers basic information about the company, the offering, the exemption you're relying on, and the amounts — a notice, not an application for approval. You must file it within 15 days after the first sale of securities in your offering, and most states also require a corresponding notice filing and fee where you have investors. Don't skip it: while a late or missed Form D doesn't automatically destroy your federal exemption in every case, failing to file can jeopardize your ability to rely on Rule 506 in the future and can create problems with state regulators.
Related topics: Regulation D 506(c) · Regulation S · Section 4(a)(2) · Issuer FAQ
Can I raise money internationally using 506(b)?
You can raise from some foreign investors under 506(b) — a foreign investor can participate if the offering complies with 506(b)'s rules, including the accreditation and no-general-solicitation requirements, and foreign investors can qualify as accredited under the same financial standards. However, selling securities into other countries also implicates those countries' securities laws, which 506(b) does nothing to satisfy. For offerings targeted at investors outside the U.S., companies frequently rely on Regulation S, the exemption for offshore offerings, often in parallel with a 506(b) offering to U.S. investors. So yes, foreign investors can join a 506(b) round, but cross-border raises need attention to foreign law and often a Reg S component — a structuring question for securities counsel experienced in international offerings.
Related topics: Regulation D 506(c) · Regulation S · Section 4(a)(2) · Issuer FAQ
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