Form D: What and Why

Form D is a notice filing to be made with the Securities and Exchange Commission (“SEC”) under Regulation D of the Securities Act of 1933, as amended (the “Securities Act”). Through required registration and detailed disclosure documents, the Securities Act aims to achieve two main objectives: (1) to require that investors receive financial and other important information about securities being offered for public sale, and (2) to prohibit misrepresentation and fraud in the sale of securities, both of which protect investors and the investment community. The Securities Act also provides for exemptions from the lengthy registration requirements in the form of Rules 504, 506(b), and 506(c). The exemptions help alleviate the administrative burden of Securities filings and streamline the process for private companies to raise capital.

To claim an exemption, an issuer of securities must file a Form D with the SEC within 15 days after the first sale of securities for each new offering.[1] The Form D filing provides information about the name of the issuer, the securities being offered, the size of the offering, when the sale occurred or will occur, and other details about the offering, along with the exemption being claimed. Form D is filed with the SEC through the Electronic Data Gathering, Analysis, and Retrieval system, commonly known as the “EDGAR” system. This simplified process protects investors by ensuring access to basic information about the offering and allows the SEC to monitor for potential violations of securities laws and for securities fraud.

Failure to file Form D with the SEC may result in serious consequences for an issuer. An issuer may lose the exemption on which the issuer intended to rely, may be required to comply with the lengthier registration requirements, and may be subject to penalties for non-compliance. Alternatively, an issuer may be in violation of regulatory requirements, which may result in investigations, the imposition of fines, or the pursuit of legal action against the issuer. Additionally, an issuer may be subject to legal consequences, such as lawsuits from investors, and may need to return invested funds. Lastly, an issuer may suffer reputational damage amongst the investment community. An unfiled Form D may ultimately make it more difficult for an issuer to raise capital in the future.

While the exemption to be relied upon may vary, the need to file Form D remains the same. Keep in mind, the federal Securities Act requirements are only a part of the analysis as the lack of uniformity in state-level securities laws (“blue sky laws”) require an additional analysis.

Our team at Milgrom & Daskam is happy to advise companies contemplating the issuance of securities to determine the exemption(s) available, prepare the required disclosures, file Form D with the SEC, and ensure compliance with any state-level filing requirements.

[1] https://www.sec.gov/education/smallbusiness/exemptofferings/formd