Regulation D basics
Regulation D is the set of SEC rules most companies use to raise money privately without registering their securities. Here is how it works and how the exemptions compare.
Last reviewed November 2026
What Regulation D is
Section 5 of the Securities Act of 1933 requires every offer and sale of securities to be registered with the SEC unless an exemption applies. Registration is expensive and slow, so private companies rely on exemptions instead. The SEC adopted Regulation D in 1982 to give companies clear conditions for exempt offerings. It is codified at 17 CFR 230.500 through 230.508.
Rule 506 offerings account for nearly all of the money raised under Regulation D, in part because they are exempt from state registration.
The rules
| Rule | What it covers |
|---|---|
| 500 | Ground rules: antifraud law and state law still apply, and Regulation D isn’t the only exemption |
| 501 | Definitions, including accredited investor |
| 502 | Integration, information requirements, the general solicitation ban and resale limits |
| 503 | Form D, due 15 calendar days after the first sale |
| 504 | Offerings up to $10 million in 12 months |
| 505 | Repealed in 2017 |
| 506 | Offerings of any size: 506(b) without general solicitation, 506(c) with verified accredited investors |
| 507 | Disqualification for issuers enjoined for not filing Form D |
| 508 | When minor mistakes don’t cost you the exemption |
Rule 504 vs. 506(b) vs. 506(c)
| Rule 504 | Rule 506(b) | Rule 506(c) | |
|---|---|---|---|
| Maximum raise | $10 million in 12 months | No limit | No limit |
| Non-accredited investors | Allowed, subject to state law | Up to 35 in any 90 days, each sophisticated | None |
| General solicitation | Only under certain state registrations or exemptions | Not allowed | Allowed |
| Accredited status | No federal standard | Reasonable belief | Reasonable steps to verify |
| Required disclosure | Antifraud rules plus state requirements | Rule 502(b) information for non-accredited investors | Antifraud rules |
| State law | Registration or a state exemption | Notice filing and fee | Notice filing and fee |
| Resale | Restricted, unless sold under Rule 504(b)(1) | Restricted | Restricted |
| Who can’t use it | SEC reporting companies, investment companies, blank check companies, bad actors | Bad actors | Bad actors |
Equity, debt or both
Regulation D works for any kind of security. In an equity offering, investors buy ownership: stock in a corporation or units in an LLC or partnership. In a debt offering, investors buy promissory notes with an interest rate and maturity, much like a loan from a group of investors instead of a bank. Convertible notes start as debt and can become equity. A combined offering sells both.
What counts as a security
The Securities Act defines “security” broadly: stock, notes, bonds, most LLC and limited partnership interests, options, warrants and investment contracts. An investment contract exists when people put money into a common enterprise expecting profits from someone else’s efforts. If you are raising money from passive investors, assume you are selling securities.
If an offering doesn’t qualify
When an offering fails to meet an exemption, investors may be able to rescind under Section 12(a)(1): return the securities and recover what they paid, with interest. States can impose fines and order rescission offers, and the SEC can bring enforcement actions. Some violations disqualify the company and its management from using Rules 504 and 506 in the future.
Other ways to raise privately
- Section 4(a)(2): the statutory private offering exemption that Rule 506 builds on, without the safe harbor’s certainty
- Regulation Crowdfunding: up to $5 million in 12 months through a registered funding portal or broker-dealer
- Regulation A: up to $20 million (Tier 1) or $75 million (Tier 2) with an SEC-qualified offering circular
- Intrastate offerings: Rules 147 and 147A, for companies selling only to residents of one state
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