Regulation D 506(c)
Regulation D 506(c) lets a company advertise its raise publicly and accept unlimited capital from accredited investors whose status is verified, with general solicitation built into the flow.
Advertise your raise publicly and accept unlimited capital from accredited investors with verification built into the flow.
What You Get
- ✓General solicitation permitted — market the deal anywhere
- ✓Unlimited raise amount
- ✓Accreditation verification workflow built in
- ✓Faster close with integrated eSign and payments
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(c)
Rule 506(c) is a Regulation D safe harbor that lets issuers publicly solicit and advertise a private placement and raise an unlimited amount — provided every purchaser is an accredited investor and the issuer takes reasonable steps to verify that status. Purchasers receive restricted securities, and the issuer files Form D within 15 days after the first sale.
At a glance
- ✓General solicitation and advertising permitted
- ✓Unlimited raise amount
- ✓All purchasers must be accredited — with verification
- ✓Securities are restricted under Rule 144
- ✓Bad-actor checks and state notice filings required
- ✓File Form D within 15 days of the first sale
What “reasonable steps to verify” means
The standard is principles-based. The SEC lists non-exclusive methods — reviewing tax returns or bank and brokerage statements, or obtaining written confirmation from attorneys, CPAs, or registered investment advisers — but issuers may adopt other procedures suited to the offering. Recent SEC guidance (a March 12, 2025 no-action letter and updated C&DIs) confirms that pairing investor self-certification with meaningful objective indicators — such as a high minimum investment plus corroborating documentation — can satisfy verification, easing the administrative burden.
Key legal and practical implications
Accredited-investor thresholds (individual income and net worth, and certain institutional criteria) remain central. Securities are typically restricted and cannot be freely resold without registration or an exemption. Bad-actor disqualification is mandatory and can void the exemption. And while Rule 506(c) preempts state registration, many states still require notice filings and fees.
Practical checklist for issuers
- ✓ Design a verification policy matched to offering size and minimum investment
- ✓ Collect and retain documentation and contemporaneous records of verification
- ✓ Run bad-actor due diligence on principals and placement agents
- ✓ File Form D within 15 days of first sale and complete required state notices
- ✓ Consider third-party verification providers or counsel to reduce risk
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(c), in depth
Rule 506(c), created by the 2012 JOBS Act and effective in 2013, is a Regulation D safe harbor on the Section 4(a)(2) statute. It removes the advertising bar: you can market the raise openly — online, through press, at public events — with no cap on the amount, against Regulation A+'s $75 million and Rule 504's $10 million ceilings. The trade is strict: every purchaser must be an accredited investor, with zero allowance for non-accredited participants, and the issuer must take reasonable steps to verify each one.
Verification can mean reviewing tax returns, bank or brokerage statements, or obtaining written confirmation from a CPA, attorney, broker-dealer, or registered investment adviser. A March 2025 SEC no-action letter added a streamlined path: a minimum investment of at least $200,000 for individuals or $1 million for entities, combined with a written representation of accredited status. Form D is due within 15 days of the first sale; state blue-sky registration is preempted, leaving notice filings. Shares are restricted under Rule 144 — commonly a six-month holding period for reporting companies, a year for non-reporting ones — and the integration rules need care when a 506(c) runs near a 506(b) or a Reg S tranche, since public solicitation cannot be un-rung.
506(c) fits issuers whose strategy depends on reaching accredited investors beyond their existing network. Directly Listed puts campaign marketing behind the raise, scopes each deal as a flat platform fee plus an equity grant, and sequences into a NASDAQ or NYSE direct listing with an ELOC or PIPE behind it.
Related topics: Regulation D 506(b) · Regulation A+ · Campaign Marketing · Issuer FAQ
Regulation D 506(c) — questions & answers
What is Regulation D 506(c), and should my company use it?
Rule 506(c) is the Regulation D exemption that lets a private company raise an unlimited amount of capital while publicly advertising the offering — something its sibling 506(b) forbids — as long as every investor is accredited and the company takes reasonable steps to verify that. Created by the 2012 JOBS Act and effective in 2013, it let private companies market a securities raise openly for the first time: online, social media, demo days, public events. Consider 506(c) if you want to reach investors beyond your existing network and are comfortable excluding all non-accredited investors and verifying each investor's status. If you're raising quietly from people you already know and might include a few non-accredited friends, 506(b) is usually the better fit.
Related topics: Regulation D 506(b) · Regulation A+ · Campaign Marketing · Issuer FAQ
Can I advertise my 506(c) offering publicly?
Yes — this is the headline feature of 506(c) and its single biggest advantage over 506(b). Under 506(c), you can engage in general solicitation and general advertising: you can promote the raise on your website, social media, email campaigns, at public demo days and pitch events, through press, and to people you have no prior relationship with. This freedom to market openly is exactly why the JOBS Act created 506(c). The catch is the flip side: because you're allowed to advertise to everyone, everyone who actually invests must be an accredited investor whose status you've verified. You can cast the net as wide as you like in marketing, but you can only accept money from verified accredited investors — that is the essential 506(c) bargain.
Related topics: Regulation D 506(b) · Regulation A+ · Campaign Marketing · Issuer FAQ
How do I verify accredited investor status for a 506(c) offering?
506(c) requires you to take reasonable steps to verify each investor is accredited — a higher bar than 506(b)'s reliance on representations. Traditional methods include reviewing IRS documents to confirm income, reviewing bank or brokerage statements to confirm net worth, or obtaining written confirmation from the investor's CPA, attorney, or a broker-dealer; many issuers use third-party verification services. In a March 2025 no-action letter, the SEC described a streamlined path: a high minimum investment — at least $200,000 for individuals or $1 million for entities — combined with the investor's written representation that they're accredited and haven't financed the investment through a third party, provided the issuer has no actual knowledge to the contrary. A no-action letter has no legal force, so the verification approach is a decision to make with counsel.
Related topics: Regulation D 506(b) · Regulation A+ · Campaign Marketing · Issuer FAQ
Can non-accredited investors participate under 506(c)?
No — this is a firm, defining limit of 506(c): every purchaser must be an accredited investor, and non-accredited investors cannot participate at all. Unlike 506(b), which allows up to 35 non-accredited sophisticated investors, 506(c) has zero tolerance here. If even one non-accredited investor buys into a 506(c) offering, you've violated the exemption's conditions and jeopardized your ability to rely on it. This all-accredited requirement is the price 506(c) charges for letting you advertise publicly — the SEC's logic being that if you broadcast the offering to the world, everyone who actually invests must be verified accredited. If including non-accredited friends, family, or community matters to you, 506(c) is the wrong tool; look to 506(b) or Regulation Crowdfunding instead.
Related topics: Regulation D 506(b) · Regulation A+ · Campaign Marketing · Issuer FAQ
Are there resale restrictions on 506(c) securities?
Yes — securities sold in a 506(c) offering are restricted securities, meaning investors cannot freely resell them immediately. They're subject to holding-period and other conditions before resale, generally under Rule 144, which for a reporting company typically requires a six-month holding period — longer, and with more conditions, for non-reporting companies, commonly a year. The securities carry restrictive legends reflecting these limits, and your transfer agent must enforce them. This illiquidity is a fundamental feature of private-placement securities, whether 506(b) or 506(c): investors are buying an illiquid position and generally cannot sell until the holding period passes or the shares are registered or another resale exemption applies. There may be no market for resale at all, and managing investors' expectations about this is an important part of the raise.
Related topics: Regulation D 506(b) · Regulation A+ · Campaign Marketing · Issuer FAQ
Can foreign investors participate in 506(c) offerings?
Foreign investors can participate in a 506(c) offering, but they must still meet the accredited investor definition and be verified like any other 506(c) investor — the requirement applies regardless of nationality. The added complexity is that selling securities into other countries also triggers those countries' securities laws, which 506(c) does nothing to address. For offerings aimed at investors outside the U.S., companies commonly rely on Regulation S, the exemption for offshore offerings, often in parallel with a 506(c) offering to U.S. investors — though care is needed because 506(c)'s general solicitation can raise questions about Reg S's no-directed-selling-efforts condition. Cross-border raises need careful structuring, which is a matter for securities counsel experienced in international offerings.
Related topics: Regulation D 506(b) · Regulation A+ · Campaign Marketing · Issuer FAQ
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