What Are the Main Differences between Regulation D Rule 506(B) and 506(C)?
The main difference between Rule 506(b) and 506(c) is how an issuer can solicit investors. Under Rule 506(b), issuers cannot use general solicitation or advertising to market the securities.
However, they can sell to an unlimited number of accredited investors and up to 35 sophisticated non-accredited investors. In contrast, Rule 506(c) permits general solicitation and advertising, but issuers must take reasonable steps to verify that all purchasers are accredited investors, and sales to non-accredited investors are not allowed.
Glossar
Regulation D Rule 506(B)
Offering ⎊ Regulation D Rule 506(B) establishes a private placement exemption from SEC registration requirements, permitting companies to raise capital without the extensive disclosures mandated for public offerings.
Rule 506(C)
Exemption ⎊ Rule 506(c) is a specific exemption under Regulation D of the U.S.
General Solicitation
Regulation ⎊ General solicitation refers to the public offering of securities to a broad audience, including non-accredited investors, through advertising or public communication.