Overview of Rule 506(c) and 506(b) Offerings

What are the real differences between Rule 506(c) and 506(b) Offerings?
The chart below covers a few of the differences between 506(b) and 506(c) offerings. Please note that this is not legal advice. You should consult with your own attorney before conducting a 506(b) or 506(c) offering. Securities regulations (and interpretations regarding such regulations) are subject to change.

 

	506(b) Offering	506(c) Offering
Communications with Investors	Companies may not advertise their security offering. Generally, companies may approach potential investors if there is a substantive, pre-existing relationship.	General advertising permitted. Companies may advertise via social media, email, or offline. No substantive, pre-existing relationship with potential investors required.
Eligible investors	Accredited investors and up to 35 non-accredited investors who meet sophistication requirements.	Only accredited investors.
Accreditation Process	Self-certification via a questionnaire is the general standard.	Companies must take reasonable steps to verify accredited investor status. Self-certification via a questionnaire is not permissible. The SEC issued examples of reasonable steps for verification.
Offering size	No limit on offering size.	No limit on offering size.
Disclosure	Companies must decide on what information to provide to accredited investors, but that information must not violate antifraud prohibitions. If non-accredited investors are included, companies must provide those investors with disclosure documents that are generally the same as those used in registered offerings. If a company provides information to accredited investors, it must make that information available to non-accredited investors as well. Companies must be available to answer questions from potential investors.	Companies must decide on what information to provide to accredited investors, but that information must not violate antifraud prohibitions. Companies must be available to answer questions from potential investors.
Filing Requirements	Companies must file a Form D.	Companies must file a Form D.
Intermediaries	Not required. If used, the intermediary must be a registered broker-dealer or exempt from broker-dealer registration.	Not required. If used, the intermediary must be a registered broker-dealer or exempt from broker-dealer registration.