Selling across state lines
If you are selling securities to people outside your state, you are responsible for complying with SEC rules. Generally,
you do not have to file with the SEC if you comply with Regulation D:
- Rule 504: Offering up to $1 million in securities within a 12 month period. You may not publicly advertise. Unless you sell exclusively
to "accredited investors" (they have net worth over $1 million), the securities must be "restricted" -
that means they are not to be resold. This restriction should be stated on the stock certificate.
- Rule 505: Offering up to $5 million in securities to accredited and up to 35 non-accredited investors. You may not
publicly advertise. The security is purchased for investment, not the intention to resell. Purchasers cannot be sell the security within a 12 month
period (this should be stated on the stock certificate). You must provide audited financial statements.
- Rule 506: Unlimited offering in securities to accredited and up to 35 "sophisticated" investors. Sophisticated
investors must have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective investment.
You must provide audited financial statements.
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