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 Securities Lawyer's Deskbook
                         published by The University of Cincinnati College of Law
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General Rules and Regulations
under the
Securities Act of 1933

Rule 506 -- Exemption for Limited Offers and Sales without Regard to Dollar Amount of Offering

  1. Exemption. Offers and sales of securities by an issuer that satisfy the conditions in paragraph (b) of this Rule 506 shall be deemed to be transactions not involving any public offering within the meaning of section 4 (2) of the Act.

  2. Conditions to be met-

    1. General conditions. To qualify for an exemption under this section, offers and sales must satisfy all the terms and conditions ofRule 501 and Rule 502.

    2. Specific Conditions-

      1. 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 Rule 506.

      2. Nature of purchasers. Each purchaser who is not an accredited investor either alone or with his purchaser representative(s) has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment, or the issuer reasonably believes immediately prior to making any sale that such purchaser comes within this description.

Regulatory History

47 FR 11262, Mar. 6, 1982, as amended at 54 FR 11373, Mar. 20, 1989

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