1. What is Form D?
2. Why Is Form D Important?
3. Reasons to Consider Not Using Form D
4. Reasons to Consider Using Form D
5. Deadline for Filing Form D
6. What Happens When Filing Form D vs. Not Filing?
7. Frequently Asked Questions
8. Steps to File Form D
9. Talk to a Lawyer

What is Form D?

Form D is a filing with the Securities and Exchange Commission (SEC) that allows companies under a Regulation D exemption or Section 4(6) exemption to offer stock to finance their businesses without going through the IPO process and selling stock to the public.

Companies that sell securities typically have to register with the Securities and Exchange Commission (SEC) under the Securities Act of 1933. This is a long process and can make it complicated to follow and understand the law. Smaller companies seeking venture capital can instead file Form D - a process that is quicker, simpler and protects the company from potential legal problems.

Why Is Form D Important?

Form D is important because it keeps you within legal boundaries. You can't simply begin selling securities to fund your business without filing the appropriate paperwork. If your offerings aren't public, you can avoid the typical registration process. Regardless of your final decision, you must let the SEC know you're offering securities.

Keep in mind that you must raise funding from “accredited investors” for the Form D exemption to apply as noted in Rule 506 of Regulation D . These are investors who usually earn over $200,000 a year or are worth at least $1 million. You can also offer securities to companies worth at least $5 million. By either registering with the SEC or filing Form D, a business has taken the time to show they're not providing an illegal public offering.

Reasons to Consider Not Using Form D

There are many exemptions from registering with the SEC, but companies usually stick with Form D because it provides the most benefits. That's why there are very few reasons to consider not using Form D. These include the following:

  • You've decided to make a public offering of securities for funding.

  • You want to keep the names of your investors from becoming public knowledge.

Filing Form D makes it easy for the public to find all of your company's information. However, there are some businesses that wish to maintain anonymity for their investors. For this reason, business owners should take a moment to consider whether making their information public might actually hurt the company.

Reasons to Consider Using Form D

There are several benefits to filing Form D, which is why it's the most popular exemption to the rule requiring Securities Act of 1933 registration. The following are some of the biggest reasons to consider using Form D:

  • It is a simple process that only involves notifying the SEC of stock promoters, executive officers, and other general information.

  • It covers you throughout America, so there's little time wasted learning state laws.

  • It avoids liabilities that could tarnish a company's reputation.

  • There are no fees for filing a Form D.

Deadline for Filing Form D

You must file Form D within 15 days of beginning to sell securities. Qualifying for an exemption under Regulation D isn't enough if you don't file on time. Your first “sale” only occurs when an investor is completely under contract to provide funding.

This timeline refers to 15 business days. If your filing deadline expires on a holiday, Saturday or Sunday, you must have it in by the following business day.

What Happens When Filing Form D vs. Not Filing?

If you qualify to use Form D when selling securities, your choice of whether to do so or not can lead to huge differences. Here are just a few examples:

  • A company wants to keep its investors confidential, so it registers with the SEC instead of filing Form D. By doing so, they must now learn the registration laws of every state they do business in and file the appropriate paperwork. Some states require a similar form, but anyone filing Form D will have a much easier time with state law.

  • A company decides to seek an exemption other than under Regulation D. They will again have to figure out state law, and the filing process will be much more complicated than simply filing Form D.

Frequently Asked Questions

  • Do startup companies have to file Form D?

If a startup is selling securities, they'll need to register, file Form D or find another exemption.

  • Will the public have access to all information in Form D?

Yes. This information will be searchable via the SEC website.

  • What if I made a mistake?

If you provided inaccurate information or something has changed, you can file Form D again as an amendment.

  • What if I don't file Form D?

Failing to register with the SEC or get an exemption can lead to fines, the right of investors to get their money back and even criminal charges.

  • What information is included in a Form D?

You must publically provide information about the offering and your company including information on the company's name, address, executive officers, directors, and the size of the offering.

Steps to File Form D

If filing Form D, you must do so online. Here are the steps you'll need to take.

  1. Get CIK number and access codes. This must be done by giving information to the SEC's Filer Management page. You must also have a Form ID notarized and submitted.

  2. Log into the SEC's electronic gathering, analysis and retrieval (EDGAR) system page. You'll only have an hour after logging in to finish Form D, so fill out a paper version first for reference.

  3. By clicking “Submit,” your Form D will be filed.

  4. Check to see if your state requires you to submit a Form D for their records. This information can be found on the North American Securities Administrators Association webpage.

Talk to a Lawyer

Although simpler than other registration processes, filing Form D can still seem complicated. If you need help filing the appropriate paperwork or making sure you're following the law, post your legal need in UpCounsel's marketplace. UpCounsel lawyers have an average of 14 years experience and only attorneys from top law schools like Yale and Harvard are accepted.