Startup Terms Glossary
What is Rule 506?
When an offering is being advertised directly and solely to only accredited investors, Rule 506 allows issuers to solicit and raise an unlimited amount of money and sell an unlimited number of shares in their company. The Securities Exchange Commission requires that if any non-accredited investors will be a part of the solicitation of these offerings, they must be well-informed with disclosure statements and must have an opportunity to ask questions and have them answered.
Rule 506 Examples
Examples of Rule 506:
- Example 1. Purchasers are awarded restricted securities through Rule 506.
- Example 2. Maximum of 35 securities can be sold to non-accredited investors
- Example 3. General advertising or soliciting is forbidden
Here’s another web page about Rule 506.
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