Instead of undergoing the expensive process of conducting a public offering of securities, companies have continually relied upon Regulation D to conduct private placements of securities. Among other requirements of Regulation D, companies are limited to selling their securities only to the “accredited investors” (with some exceptions). Rule 501 of Regulation D defines an accredited investor (as it pertains to individuals) as any one of the following: (i) a director, executive officer, or general partner of the issuer of the securities being offered; (ii) a natural person whose individual net worth, or joint net worth with that person's spouse, exceeds $1,000,000 (excluding the value of the primary residence); or (iii) a natural person who had an individual income in excess of $200,000 in each of the two most recent years or…
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