What is the purpose of form d?

Form D is used to file a notice of an exempt offering of securities with the SEC.

What is a Form D?When you do a Series A financing, you’re selling shares, aka securities. A sale of securities is either registered or exempt. Most early startup financings (Series Seed/A/B etc.) are exempt. A sale that isn’t exempt must be registered with the SEC. If the sale of securities is exempt, you must file a form letting the SEC know that your sale is exempt. Although the formal name of this filing is “Notice of Exempt Offering of Securities,” in the startup world it’s affectionately referred to as a “Form D.”

You must electronically file the Form D within 15 days after the first sale of securities in an offering (e.g. your first Series A closing).

Who Can See a Form D?So who can see a Form D? Anyone who goes to the SEC's EDGAR search tool, types in your company name, and clicks on your company’s Form D. Anyone. It’s all public. Try it—type in a company that’s in the news for getting a Series A or Series B recently.

What is on a Form D?The Form D asks you to list specifics about your fundraising. This includes listing (a) “The Total Offering Amount” (the amount you want raise), (b) “The Amount Sold” (the amount you actually raised), and (c) “The Total Remaining to be Sold” (the amount you failed to raise, but are still trying to raise).

They’ll also ask you to enter some information about your people, namely anyone who is considered a “Related Person.” Who counts as a “Related Person?” You don’t have to say who has invested in your company. However, you do have to list other people, such as your board members. And if a VC has invested a lot of money in your company, they’ll often put themselves on your company’s board. So, by listing who’s on your board, you’re essentially letting people know (whether you intend to or not) that a VC has invested a large amount of money in your company. The SEC also says to list “Executive Officers” or people “performing similar functions (title alone is not determinative).” Your lawyer will likely list your officers (president, secretary, treasurer) and maybe founders, too, just to be safe.

Preparing for a Form DSo how can you prepare for the fallout of a Form D filing? Before your Form D is filed, tell the people who should find out from you that your company got a financing (i.e., your mom) before they hear it from the press. You should also be ready for the press. This is a great PR moment for you—an excellent opportunity to raise your company’s profile. Don’t squander it by not being ready.

While there’s no guarantee the press will be interested, they will be more likely to pick the story of your investment up when your investors are well respected in the investor community. You should be prepared with answers to common questions that the press will likely ask you about your financings:

Alternatives to Form DMost lawyers choose to file a Form D. But depending on how capital is raised, your lawyers might consider another exemption from registration. If you're not comfortable with your financing being made public within 15 days of closing, see if there are other exemptions that your lawyer could use—otherwise they might use Form D without considering your input.

Final WordsYour lawyer will likely file a Form D for you with the SEC after you close your equity financing. Although they might not even tell you about this, there are implications for your business when they do this. The press will know about it immediately, and, if you have high-profile investors, the press may come calling. This could be your chance to shine. Good luck. Hey—congrats—you’re living every startup’s dream. And don’t forget to call your mom!

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.

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.

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:

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.

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:

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.

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:

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

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

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

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.

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.

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

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.

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.

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:

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.

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:

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.

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:

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

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

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

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.

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.

SEC Form D is the form used by companies to notify the SEC that they have made an offering of securities but that they haven’t registered these securities with the SEC. This exemption from offering securities without registering them is covered in SEC Regulation D (Reg D), a section of the Securities Act of 1933.

SEC regulations, as noted above, are established to protect investors against fraudulent securities offerings. But the securities registration process is lengthy and complicated, and it usually requires many months and the services of expensive experts to guide a company through the process. Reg D, however, allows a business that meets specific requirements to bypass the formal registration process.

Form D is used by businesses and entrepreneurs to notify the SEC about several types of securities sales called exempt offerings under several SEC rules, including:

Businesses formed as corporations, general or limited partnerships, limited liability companies (LLCs), or trusts can use this notice form.

Since you aren’t registering your securities sale, the SEC wants your investors to be knowledgeable about the risks and have more-than-minimal assets. The Commission wants you to verify that your investors are accredited investors by their earned income or net worth. Trusts and entities in which all equity owners are accredited, like an LLC or corporation, can also be considered as accredited investors.

On Form D, you must also identify “Related Persons” so the SEC can check their credentials. This includes:

You will need to file SEC Form D online with the SEC and you may need to file this notice with your state as well. It must be filed within 15 days after the first sale of securities in the offering. The date of first sale is the date the first investor is irrevocably contractually committed to invest. The SEC doesn’t charge a filing fee.

Form D is available online in fillable PDF form, and the instructions are included.

To file online with the SEC, you must use the SEC’s Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system. Before you file, you must apply for EDGAR access. You’ll get an identification number (called a “Central Index Key” or “CIK” number) and a set of access codes to use for the Form D filing. Then you can use the EDGAR access to save and file Form D.

You may also need to file Form D with your state and pay a filing fee, depending on your state’s Form D filing regulations. Some states allow both paper and online filing, and other states require that Form D be filed online. You can find contact information for your state securities agency on the website of the North American Securities Administrators Association (NASAA). For filing Form D with your state online, see the NASAA Electronic Filing Depository (EFD).

The SEC will authenticate your request and make a determination on it, which you’ll receive through email. If your application is rejected, the email will state the reason for the rejection and tell you how to resolve the issue(s).

You might receive a notice of disqualification for several reasons, and these are different depending on the Rule number (i.e. 506(b) or 504). The usual reason for disqualification is a “bad actor” disqualification if one of the related persons in Item 3 of Form D has a “relevant criminal conviction, regulatory or court order or other disqualifying events.” The disqualifying event must have occurred on or after September 23, 2013, when the SEC rule amendments became effective.