Regulation D

An SEC regulation governing exemptions for private placement. This option allows smaller companies to raise capital through debt securities or sale of equity without first having to register their securities with the SEC.


Registering securities with the U.S. Securities and Exchange Commission is a little like resolving to get complex dental work completed. You know that the process is going to suck, but you have to get it done and deep-down, you know that the longer you put it off, the more painful it is going to be. Large corporations spend a significant amount of time and resources filing disclosures and registering securities with the SEC because they will be held liable if they do not comply with necessary reporting and registration mandates in an accurate, thorough and timely fashion. Regulation D exempts eligible, smaller private companies and entrepreneurs from some of these arduous securities registration mandates.


The benefits associated with Regulation D exemptions are primarily rooted in the ability to raise capital quickly and in cost-effective ways. When larger companies go public, they must each participate in an initial public offering. Before this process can get underway (and shares of a corporation’s stock may be sold to the public) a corporation must go through the resource-intensive process of registering those securities that will be sold during the IPO. Registration is costly and takes a great deal of time. Regulation D exemptions allow eligible small companies to bypass this registration requirement and to instead raise capital by selling certain kinds of equity that has not been traditionally registered with the SEC.



Friend One: “I hear your company is going public. That’s great! When is your IPO scheduled for?”

Friend Two: “Actually, we’re not having a traditional IPO. Because we’re a little boutique corporation, we can take advantage of Regulation D in order to bypass all that.”

Friend One: “Must be nice to be in the ‘human clothing for pets’ and ‘rare olive oil’ business.”

Friend Two: “It certainly is, my friend. It certainly is.”