General Rules and Regulations
Securities Act of 1933
Rule 505 -- Exemption for Limited Offers and Sales of Securities Not Exceeding $5,000,000
Exemption.Offers and sales of securities
that satisfy the conditions in paragraph (b) of this section by an issuer that is
not an investment company shall be exempt from the provisions of section
5 of the Act under section 3(b) of the Act.
Conditions to be met
General conditions. To qualify for exemption
under this section, offers and sales must satisfy the terms and conditions of Rule 501 and Rule 502.
Limitation on aggregate offering price. The
aggregate offering price for an offering of securities under this Rule 505, as defined
in Rule 501(c), shall not exceed $5,000,000, less the
aggregate offering price for all securities sold within the twelve months before
the start of and during the offering of securities under this Rule 505 in reliance
on any exemption under section 3(b) of the Act
or in violation of section 5(a) of the Act.
Note: The calculation of the aggregate offering price is illustrated
Example 1. If an issuer sold $2,000,000 of its securities on June 1, 1982
under this Rule 505 and an additional $1,000,000 on September 1, 1982, the issuer
would be permitted to sell only $2,000,000 more under this Rule 505 until June 1,
1983. Until that date the issuer must count both prior sales towards the $5,000,000
limit. However, if the issuer made its third sale on June 1, 1983, the issuer could
then sell $4,000,000 of its securities because the June 1, 1982 sale would not be
within the preceding twelve months.
Example 2. If an issuer sold $500,000 of its securities on June 1, 1982 under
Rule 504 and an additional $4,500,000 on December 1, 1982
under this Rule 505, then the issuer could not sell any of its securities under this
Rule 505 until June 1, 1983. At that time it could sell an additional $500,000 of
Limitation on number of purchasers.There
are no more than or the issuer reasonably believes that there are no more than 35
purchasers of securities from the issuer in any offering under this section.
Note: See Rule 501(e) for the calculation
of the number of purchasers and Rule 502 (a) for what
may or may not constitute an offering under this section.
Disqualifications. No exemption under
this section shall be available for the securities of any issuer described in Rule 262 of Regulation A, except that for purposes of this
The term "filing of the offering statement
required by Rule 252" as used in Rule
262(a), (b) and (c)
shall mean the first sale of securities under this section;
The term "underwriter" as used in
Rule 262 (b) and (c) shall
mean a person that has been or will be paid directly or indirectly remuneration for
solicitation of purchasers in connection with sales of securities under this section;
Paragraph (b) (2) (iii) of this Rule 505 shall
not apply to any issuer if the Commission determines, upon a showing of good cause,
that it is not necessary under the circumstances that the exemption be denied. Any
such determination shall be without prejudice to any other action by the Commission
in any other proceeding or matter with respect to the issuer or any other person.
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