C is corrent. Regulation D of the Securities Act of 1933 has three important exemptions in Rules 504, 505, and 506. Rule 504 exempts an issuance of up to $1,000,000 of securities sold within a 12-month period to any number of investors whether they are accredited or nonaccredited. Rule 505 increases the exemption to $5,000,000 but restricts the sale to 35 nonaccredited investors. Sale to an unlimited number of accredited investors is permitted. Rule 506 is similar to rule 505 except that the dollar amount is now unlimited, and the sale to up to 35 nonaccredited investors requires that they also be sophisticated investors with knowledge and experience in financial matters. A sale can still be made to an unlimited number of accredited investors.
A is incorrect. In Rule 504, there is no restriction on the number of investors but on the dollar amount of the issuance. Rules 505 and 506 have a 35-person limit on nonaccredited and "sophisticated" nonaccredited investors respectively, but do not have a limit on accredited investors.
B is incorrect. There is no requirement that the company be a small business for Regulation D to apply.
D is incorrect. Rule 506 of Regulation D does not limit the dollar amount of sales or offers of common stock.
|
