Exemptions to Registration
The Act contains a few notable exemptions from registration for certain types of transactions:
Section (3)(a)(11) Intrastate Offerings. Offerings made exclusively to residents of a single state by a company both resident and doing business in that state are exempt from registration.
Section (3)(b) Administrative Authority. The Act gives S.E.C. authority to create exemptions for offerings up to $5,000,000 where it finds that registration "is not necessary in the public interest and for the protection of investors."
Section (4)(1) Exempts all transactions by any person who is not "an issuer, underwriter, or dealer." If not for this exemption, any shareholder of a company who simply wanted to sell their shares on the open market would have to register the sale.
Section (4)(2) Private Offerings. Transactions not involving a public offering (which is a term of art) are exempt from registration.
Section 4(6) Accredited Investors. Exempts offers and sales made solely to accredited investors.
Pursuant to S.E.C.'s (3)(b) authority, it has created several exemptions for limited offerings, the most important being:
Regulation A, for offerings up to $5,000,000 through a modified form of S.E.C. filing. 17 C.F.R. §§ 230.251 to 230.264.
Regulation D, containing two exemptions (Rule 504 and Rule 505) for offerings up to, respectively, $1,000,000 and $5,000,000. 17 C.F.R. §§ 230.501 to 230.508.
In addition, using its general rule-making authority, the S.E.C. has created the following other registration exemptions:
Rule 147, an intrastate offering exemption that is a regulatory alternative to the statutory Section 3(a)(11) exemption. 17 C.F.R. 230.147.
Rule 506, a private offering exemption that is a regulatory alternative to the Section 4(2) statutory exemption contained in the Act. 17 C.F.R. § 230.506. Rule 506 is technically part of Regulation D, 17 C.F.R. §§ 230.501 to 230.508, although the S.E.C.'s authority to promulgate Rule 506 is derived from its general rule-making authority rather than Section 3(b) of the 1933 Act. Rule 506 is the most frequently used of all registration exemptions. Notably, the National Securities Markets Improvement Act of 1996 declared that securities offered pursuant to Rule 506 are exempt from all state securities laws.
Rule 1001, an exemption for issuers exempt from state registration under California Corporations Code § 25102, or under any other similar state exemption approved by the S.E.C. 17 C.F.R. 230.1001.
