What is a Form D Filing?
Form D is a legal notice that informs the U.S. Securities and Exchange Commission (SEC) when securities are being sold without registration. It features information about your company and your investors, so that you can legally sell securities without having to register them.
Filing a Form D is commonly completed by startups when they want to raise capital from investors. If you need to complete this form, you might wonder how to go about it.
Read the rest of this article to learn more about Form D filing, such as what information to include in it and why it’s so crucial to file it on time.
What’s Included in a Form D?
A Form D includes important information such as the following:
- Issuer information. This includes your company name, address, and the type of business you have.
- Related persons. The names and addresses of key persons involved in your business, such as directors and officers, need to be included.
- Details of the offering. You should clearly define the total amount offered, amount sold, and the securities type.
- Investors. Include the number and type of investors.
What are Important Reasons to File a Form D?
You shouldn’t ignore the importance of Form D submissions. Some good reasons to file a Form D include the following:
- You’ll stay legally compliant. Filing a Form D is required by law in many U.S. states, so you don’t want to face potential penalties from not submitting the document.
- You’ll make investors feel secure. When investors see the comprehensive information you’ve provided, they will see that you’re professional and compliant, which will make them want to work with you.
What are the Steps Involved in a Form D Filing?
Filing a Form D is easy, although you have to ensure that you complete it within 15 days of your first sale.
If it’s your first time submitting Form D, you will need to sign up to the SEC’s EDGAR (Electronic Data Gathering, Analysis, and Retrieval) system. For this, you’ll have to complete and send a Form ID (see the section below). This form will give you a Central Index Key (CIK), CIK Confirmation Code (CCC), Password Modification Access Code (PMAC), and password.
Once you have your account set up, follow these steps:
- File Form D through the EDGAR system. After logging in, you’ll access online forms where you’ll choose ‘Form D’ under ‘Make a filing.’
- Once you’ve submitted Form D, you should receive confirmation and the form will be on the EDGAR database. Note that in some U.S. states, you’ll have to file a notice related to the Form D filing.
What is Included in Form ID?
If you have to sign up with the EDGAR system, you’ll need to fill out a Form ID. It requires the following information:
- Company name (this includes the issuer’s full legal name)
- Entity type, such as LLC or corporation
- Business mailing address
- Primary business address
- Telephone number
- Tax or Federal Identification Number
- State of Incorporation
- Fiscal year end (include the day and month)
- Contact information (this includes your name, phone number, and email address)
- Account information (this includes details of the person who will use the SEC account information to complete your Form D filing)
- Signature (include your name and title)
After submitting Form ID, you’ll receive confirmation that you have access to the EDGAR system so that you can proceed with filing your Form D.
Tips When Filing Form D
- You should strive to file your Form D early so you don’t miss the deadline. Filing early also gives you a chance to become familiar with the EDGAR system and ensure you don’t have any login problems that could cause you to miss the filing deadline.
- Check all the information you’ve provided in Form D so there aren’t any mistakes.
- Confirm that your company name is an exact match to what’s included in your legal business documents.
- Ensure clarity about the security class and your offering size. This will prevent follow-ups from the SEC.
- You want to clarify your investors so that you stay legally compliant.
- File amendments on time.
When Do You Need to File Amendments?
You should file amendments to Form D when there are changes you need to report. This includes changes to your company, changes to the people mentioned in the original submission, or changes to any incorrect information you previously filed.
It’s also important to file an annual amendment if your offering remains open or you continue to sell securities. This ensures that your filing remains updated and shows that you’re compliant.
What Happens if You Don’t File a Form D?
If you miss the deadline for filing Form D, you risk the following consequences:
- The capital you raise might not be protected under the SEC’s Regulation D exemption.
- You could be investigated by the SEC.
- You might be penalized or prohibited from future offerings.
- Investors might have concerns about your legal compliance, which could create challenges for raising capital.
Do You Need a Lawyer for Form D Filing?
You don’t usually require assistance from a lawyer to file Form D with the SEC. This is because the process is straightforward and you’ll find the form online. What’s required in the form is simple information you would know, so there shouldn’t be any complications.
However, if you’re dealing with a large sum of money, many investors, or you’re unsure of the process involved, you should consult with a lawyer as it will save you time. Here is how a lawyer can help you:
- They’ll ensure you don’t miss any deadlines when filing and amending your Form D.
- They’ll check that you’re using the correct exemption, such as 506(b) or 506(c), so that you don’t make mistakes.
- They’ll ensure that all your information is clear and honest so that you reduce your risk of the SEC asking you follow-up questions.
- They’ll help you gather all the important supporting documents you require when filling.
- They’ll guide you through the process so that it’s simple and stress-free, which is especially beneficial if you don’t have time to do it yourself.
Where can you find a lawyer to help you with a Form D filing?
Hire a lawyer from ContractsCounsel, an online legal marketplace that connects clients with lawyers who have been vetted on the platform. Although filing a Form D is easy, it’s essential to do it correctly, and that’s where a lawyer can help you. They’ll ensure you haven’t made any mistakes that could cost you or result in a lack of legal compliance.