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Is New York’s Form 99 Required When a Rule 506 Offering Has New York Investors?

February 28, 2018 by Alexander J. Davie

The vast majority of private companies raising capital use Rule 506 of Regulation D, which, if complied with, ensures the securities being sold are exempt from registration with the Securities and Exchange Commission (SEC) because the offering of these securities does not involve “any public offering.” One of the primary advantages of a Rule 506 offering is that it is considered an offering of “covered securities,” which means that individual states cannot require issuers who meet the conditions of Rule 506 to register their offerings at the state level. By granting covered security status to Rule 506 offerings, Congress greatly reduced the compliance costs of companies raising private capital who would otherwise have to comply with the unique registration or exemption requirements of each state where one of their investors happened to live.

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Filed Under: General Business Law, Private Equity and Hedge Funds Tagged With: Form 99, New York Blue Sky, PF Recent, Recent, Regulation D, Rule 506

About the editor

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Strictly Business is a business law blog for entrepreneurs, startups, venture capital, and the private fund industry. Its editor is Alexander J. Davie, an attorney at Riggs Davie PLC based in Nashville, Tennessee. His practice focuses on corporate, securities, and business law. He works mainly with technology companies, including startups and emerging companies, and private equity, venture capital, and hedge funds.
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