You have indicated your business will be able to raise all of the money it needs in an offering involving general solicitation to verified accredited investors only. As such, you may wish to consider using the Rule 506(c) exemption to conduct the offering.
Under Rule 506(c), all purchasers of the securities must be accredited investors, and the issuer is required to take reasonable steps to verify that such purchasers are accredited investors. In certain circumstances, verification may be performed by a registered investment adviser, broker-dealer, attorney, or certified public accountant.
In order to use the Rule 506(c) exemption in Washington, you must make a notification filing with the SEC as well as with the Washington Securities Division.
Rule 506(c) offerings are subject to “bad actor” disqualification provisions, which disqualify an issuer from conducting an offering in reliance on the exemption if the issuer or other relevant persons (such as underwriters, placement agents and the directors, officers and significant shareholders of the issuer) have been convicted of, or are subject to court or administrative sanctions for, securities fraud or other violations of specified laws.
In addition, you must furnish each purchaser with a written description of any matters that would have triggered disqualification under § 230.506(d)(1) (“bad actor” events) but for the fact the matter(s) occurred before September 23, 2013.
To learn more about offerings under Rule 506(c) and related filing requirements, please consult the Rule 506(c) section of our Offering Options publication.
Please note that even if you are selling only to verified accredited investors, you may still wish to register the offering. For information about registration, please see registration section of the decision tree.