Regulatory Disclosures

Introduction: Rule 506(b) of Regulation D

Raising capital is a critical aspect for companies seeking to grow and expand their operations. To facilitate such capital-raising activities while ensuring investor protection, the Securities and Exchange Commission (SEC) has established regulations governing private placements. One of the most commonly utilized rules is Rule 506(b) of Regulation D or Rule 506(c) of Regulation D, which provides a “safe harbor” for companies to raise funds under certain conditions. This summary will outline the key requirements and guidelines that A List Group Holdings must adhere to when raising capital under Rule 506(b) of Regulation D or Rule 506(c) of Regulation D.

All funds under A List Group Holdings will use either Rule 506(b) of Regulation D or Rule 506(c) of Regulation D dependent on per deal.

Rule 506(b) Overview:

Rule 506(b) is a safe harbor provision under Section 4(a)(2) of the Securities Act, offering clear standards for companies to satisfy the requirements of this exemption. It enables companies to conduct private placements without registering their securities with the SEC, making it an attractive option for raising capital.

No General Solicitation or Advertising:

Under Rule 506(b), A List Group Holdings is prohibited from engaging in general solicitation or advertising to market its securities. This means the company cannot publicly promote the offering through media outlets, advertising campaigns, or other mass communication methods. Instead, it must rely on private communication channels and pre-existing relationships to reach potential investors.

Accredited Investors and Non-Accredited Investors:

Rule 506(b) permits companies to sell securities to an unlimited number of accredited investors. These investors are deemed to possess the financial sophistication and resources necessary to evaluate and bear the risks associated with private investments. However, if A List Group Holdings decides to include non-accredited investors in its offering, certain limitations apply.

Non-Accredited Investor Limitation:

When including non-accredited investors, A List Group Holdings must ensure that the number of non-accredited investors does not exceed 35. Additionally, non-accredited investors participating in the offering must meet specific criteria. They must demonstrate sufficient knowledge and experience in financial and business matters to evaluate the investment’s merits and risks. This requirement aims to protect investors who may have limited expertise in assessing private investment opportunities.

Disclosure Documents:

In an offering involving non-accredited investors, A List Group Holdings must provide disclosure documents that contain information similar to what is required in Regulation A offerings. While the company is not obliged to furnish these specified documents to accredited investors, any information provided to accredited investors should also be made available to non-accredited investors.

Financial Statement Information:

A List Group Holdings must provide non-accredited investors with financial statement information as specified in Rule 506. These financial statements should offer a comprehensive understanding of the company’s financial health, operations, and risks involved. The objective is to ensure that non-accredited investors have access to the necessary data to make informed investment decisions.

Availability for Questions:

To address any queries or concerns from prospective purchasers who are non-accredited investors, A List Group Holdings should be readily available and responsive. By being accessible, the company can fulfill its responsibility to provide additional information, clarify uncertainties, and maintain transparency throughout the offering process.

Restricted Securities:

Investors participating in a Rule 506(b) offering will receive “restricted securities.” These securities are subject to certain restrictions on resale or transfer, primarily to prevent the unrestricted distribution of securities and maintain the integrity of the offering. It is essential for A List Group Holdings to inform investors about the nature and limitations of restricted securities.

Form D Filing:

Within 15 days after the first sale of securities in the offering, A List Group Holdings is required to file a notice with the SEC on Form D. Form D serves as a notice filing that provides essential information about the company, the offering, and the securities being sold. Although Rule 506(b) preempts state registration and qualification requirements, some states may still require notice filings and impose associated fees.


Raising capital under SEC Rule 506(b) of Regulation D offers A List Group Holdings the opportunity to access funding from accredited and, to a limited extent, non-accredited investors. By adhering to the requirements outlined in this summary, the company can navigate the private placement process in a manner that satisfies regulatory obligations while attracting potential investors. Compliance with Rule 506(b) ensures transparency, investor protection, and a robust foundation for capital-raising endeavors.

You can read more about this on the SEC website:

Introduction: Rule 506(c) of Regulation D

In order to facilitate capital raising activities, the Securities and Exchange Commission (SEC) established Regulation D under the Securities Act. One of the provisions within Regulation D is Rule 506(c), which allows issuers like A List Group Holdings to engage in broad solicitation and advertising while raising capital. This summary will provide an overview of the rules and requirements associated with Rule 506(c) to ensure compliance and successful fundraising endeavors.

Accredited Investor Requirement:

Under Rule 506(c), A List Group Holdings can solicit and advertise its offering to the general public. However, it is crucial to note that all purchasers participating in the offering must be accredited investors. Accredited investors are individuals or entities that meet specific income or net worth thresholds as defined by the SEC. By limiting the offering to accredited investors, the SEC aims to protect non-accredited investors from higher-risk investments.

Verification of Accredited Investor Status:

A List Group Holdings is required to take reasonable steps to verify the accredited investor status of each purchaser in a Rule 506(c) offering. The SEC does not prescribe a specific method for verification but emphasizes the importance of implementing reasonable procedures. Verification methods may include reviewing financial documents, tax returns, or obtaining written confirmations from qualified professionals such as attorneys or certified public accountants.

Additional Conditions and Compliance:

In addition to the accredited investor requirement and verification process, A List Group Holdings must satisfy certain other conditions outlined in Regulation D to comply with Rule 506(c). These conditions include:

  • Filing Form D: Within 15 days after the first sale of securities in the offering, A List Group Holdings must file a notice with the SEC on Form D. This filing is essential for regulatory purposes and ensures transparency and accountability in the capital raising process.
  • Restricted Securities: Purchasers in a Rule 506(c) offering receive “restricted securities,” which have limitations on their transferability. These securities cannot be freely traded in the secondary market without registration or an applicable exemption.
  • State Notice Filings and Fees: While Rule 506(c) provides a federal preemption from state registration and qualification, individual states may still require issuers to file notices and pay applicable fees. A List Group Holdings should be aware of the state-specific requirements and comply with any necessary filings to avoid legal issues.
Bad Actor Disqualification Provisions:

Rule 506(c) offerings are subject to “bad actor” disqualification provisions, which aim to prevent individuals or entities with a history of securities law violations from participating in these offerings. A List Group Holdings must conduct thorough due diligence on its directors, executive officers, and significant shareholders to ensure compliance with the disqualification provisions.


Understanding and adhering to the rules and requirements of Rule 506(c) of Regulation D is crucial for A List Group Holdings when raising capital. By limiting the offering to accredited investors, verifying investor status, satisfying the conditions outlined in Regulation D, and complying with state-specific filings, A List Group Holdings can conduct a successful capital raising campaign while maintaining regulatory compliance. Moreover, conducting due diligence to identify any “bad actors” within the organization ensures that the offering remains free from potential legal issues. By following these guidelines, A List Group Holdings can navigate the regulatory landscape and pursue its capital raising objectives efficiently and effectively.

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