When to Amend a Form D

As noted earlier, the scope of the median offer of Regulation D, based on the information contained in the documents filed in Form D, was approximately $1.5 million between 2009 and 2012. The presence of such a large number of relatively small offers suggests that a significant number of current investors in Rule 506 offers are natural or legal persons whose shareholders are all natural persons. This is because small offerings may not offer enough leeway for institutional investors to generate a significant return. Institutional investors generally have a larger investable capital base and more formal screening procedures than investors who are natural persons, and the costs associated with identifying potential investments and tracking their investment portfolio lead them to make larger investments than individuals. [198] With respect to whether the natural persons investing in these offers are qualified investors or non-qualified investors, almost 90% of the Settlement D offers made between 2009 and 2012 did not involve non-qualified investors. [199] A number of the proposed amendments to Form D would require additional specific information for the tenders referred to in Rule 506(c), which would allow the Commission to better understand the new market under Rule 506(c), particularly with respect to matters for which no information would otherwise be available. Other proposed amendments to Form D would require additional information both with respect to tenders under Rule 506(b) and tenders under Rule 506(c), which would allow for a more complete analysis and comparison of the application of existing Rule 506(b) and new Rule 506(c). [220] In the absence of an essentially similar set of information collected for tenders under Rule 506(b) and tenders under Rule 506(c), the impact of the application of the general invitation to the market under Rule 506 may be difficult to measure or identify. Greater consistency in the reporting of information contained in Form D submissions for tenders under Rules 506(b) and 506(c) would promote the availability of comparable data for both types of tenders and could therefore lead to a more comprehensive assessment of the impact of the removal of the prohibition on the general call for capital under Regulation D. Given that the vast majority of offers under Regulation D are made on the basis of Article 506, this should provide the Commission with much more comprehensive market information under Regulation D in general, which, together with the information gathered under the Review Programme of Commission Regulation No 506, would help the Commission assess the need for additional measures to improve investor protection. While the adoption of Article 506(c) is the impetus for the proposed amendments to Article 156 to extend its guidelines to private funds, the proposed amendments would apply to all private funds, including private funds carrying out general promotional activities in accordance with Article 506(c). This reflects our view that statements or representations may mislead investors regardless of the nature of the offer, the sophistication of investors, or whether such documents are used in a general solicitation.

[138] Under the rules of the Securities and Exchange Commission, effective March 16, 2009, issuers of securities relying on the Safe Harbor for Private Placements under Regulation D must file an annual update of Form D if the originally announced offer continues on the anniversary of the previous filing. Many hedge funds and other private mutual funds engage in continuous offerings that last more than a year. When amending a notification previously submitted to Form D, all the information on the form must be updated, even if a particular change alone would not have triggered the need for a change. All filings must be made electronically through the SEC`s EDGAR website. If the exhibitor has not yet submitted electronically, they must receive the EDGAR access codes, which usually takes 24 to 48 hours from the submission of the signed and notarized application forms. Issuers should take this additional time into account when planning their compliance schedules. We also recognize the specific concerns expressed by commentators about the ability of private funds to advertise to the public, especially since private funds raise a significant amount of capital in 506 bids. [106] Under Rule 506(c), private funds such as hedge funds, venture capital funds and private equity funds may, in accordance with the rule, make a general solicitation without losing the exclusions from the definition of ”investment company” under section 3(c)(1)(107) or section 3(c)(7)[108] of the Investment Companies Act.

[109] Several commenters on the publication of the proposal under section 506(c) of the Regulations recommended that we provide additional conditions for private funds on the basis of section 506(c). 132. See Rule 156(b)(2). The inclusion of information on controllers would allow investors to better identify persons who may influence the offer under Rule 506(c). Identity information can also be useful if you have questions about the offer. Issuers would incur additional reporting costs if there were controlling persons who are not also related persons. In many cases, this information is easily accessible and easy to collect, in particular as issuers identify controlling shareholders in accordance with the bad actor provisions we adopt today. However, issuers may find this change expensive, as they may want to keep information about controlling persons confidential. If the Commission were to accept these amendments, we assume that these changes would also apply to documentation on sales of private funds, as we believe that descriptions of statements that could be misleading (e.g. B a statement that highlights a single factor as a basis for determining the suitability of an investment) would also apply to statements in the sales documentation of private funds. 45. .

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