End-to-end legal architecture from term-sheet to closing, ensuring strict compliance with Rule 506(b)’s prohibition on general solicitation.
Raising capital under Rule 506(b) of Regulation D remains the most widely used exemption for private companies, startups, and funds. It allows issuers to raise an unlimited amount of capital, provided they strictly adhere to the SEC’s prohibition on general solicitation and advertising. Navigating these rules—especially when admitting non-accredited investors—leaves no room for error.
At Ishimbayev Law Firm, we provide comprehensive legal architecture for your 506(b) offering. We ensure a seamless, legally sound progression from the initial term sheet negotiations to the final issuance of securities, protecting your founders and the company from regulatory scrutiny.
Structuring the core economic and governance terms (e.g., valuation, liquidation preferences, voting rights) to align founders and early-stage investors before full document drafting.
Drafting definitive Subscription Agreements that firmly bind the investor’s capital commitment while providing robust indemnification for the issuer.
Creating targeted Investor Questionnaires to verify accredited status and appropriately document the financial acumen of up to 35 “sophisticated” non-accredited investors.
Providing cross-border legal solutions tailored to U.S. and international markets.
We assess your capital needs and investor network to confirm that a 506(b) offering is the appropriate vehicle, ensuring you have the necessary “substantive, pre-existing relationships.”
We meticulously prepare the entire offering package, coordinating the subscription documents with your Private Placement Memorandum (PPM) or core disclosure materials.
Creating targeted Investor Questionnaires to verify accredited status and appropriately document the financial acumen of up to 35 “sophisticated” non-accredited investors.
A single misplaced tweet or public pitch can blow your 506(b) exemption. We provide strict legal guardrails and communication guidelines to ensure your capital raise remains truly private.
Admitting non-accredited investors under 506(b) triggers complex disclosure requirements. We meticulously structure your offering to satisfy the SEC’s “sophistication” test without exposing your company to unnecessary liability.
We handle the heavy administrative lifting of the subscription process. Our streamlined workflows allow founders and fund managers to focus on pitching their network, not chasing signatures.
We build your capital stack with the future in mind. Our 506(b) closing sets are engineered to withstand rigorous due diligence from future Venture Capital, Private Equity, or M&A buyers.
Absolutely not. Rule 506(b) strictly prohibits “general solicitation or general advertising.” You may only approach investors with whom you or your placement agent have a substantive, pre-existing relationship. If you wish to advertise, you must structure the raise under Rule 506(c).
You may include up to 35 non-accredited investors. However, they must be “sophisticated”—meaning they have sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of the investment.
Securities sold under Regulation D are “restricted,” meaning they cannot be readily resold in the public marketplace. We draft the required legal notice (the legend) that must be placed on the physical or electronic stock certificates to inform the holder of these transfer restrictions.
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