Updated · Part of the CRE investment glossary
What Rule 503 requires
Rule 503 of Regulation D requires an issuer relying on Rule 504 or Rule 506 to file a notice of sales on Form D for each new offering no later than 15 calendar days after the first sale. If day 15 falls on a Saturday, Sunday or holiday, the due date moves to the next business day.
The date of first sale is the date the first investor is irrevocably contractually committed to invest. Depending on the subscription terms, that can come before any money arrives. Form D is filed electronically on EDGAR and signed by a person authorized by the issuer. The SEC charges no fee for a Form D or its amendments.
Worked example: counting the 15 days
Count calendar days from the day after the first sale. Weekends in between do not matter; only a weekend or holiday on day 15 moves the deadline.
| First sale | Day 15 | Form D due |
|---|---|---|
| Monday, March 2 | Tuesday, March 17 | Tuesday, March 17 |
| Friday, May 1 | Saturday, May 16 | Monday, May 18 |
| Thursday, June 4 | Friday, June 19 (Juneteenth holiday) | Monday, June 22 |
What Form D asks
Form D is short, and filed notices are public on EDGAR, so anyone can read them. It asks for:
- The issuer: name, entity type, jurisdiction and year of formation, and address.
- Related persons: executive officers, directors and promoters.
- Industry group, with real estate options, and issuer size, which the issuer may decline to disclose.
- The exemption claimed, such as Rule 506(b) or Rule 506(c), and the type of securities.
- The date of first sale, minimum investment, total offering amount, amount sold and number of investors, including any non-accredited investors.
- Sales compensation paid to brokers or finders and the states where they solicit, and proceeds used for payments to executive officers, directors or promoters.
When to amend
Under Rule 503(a)(3), an amendment must answer every item with current information, not only the item that changed. An issuer must amend:
- Annually, on or before the first anniversary of the original filing or the most recent amendment, if the offering is still continuing.
- As soon as practicable to correct a material mistake of fact or error.
- As soon as practicable to reflect a change in the information, with listed exceptions: for example, changes in the amount sold or the number of investors, or an increase in the offering amount of 10% or less.
State notice filings (blue sky)
Securities sold under Rule 506 are covered securities under Section 18 of the Securities Act, so states cannot require them to be registered. States may still require a notice filing, a fee and a consent to service of process.
Most states require a notice filing for Rule 506 offerings, usually a copy of the Form D and a fee, often due within 15 days after the first sale to a resident of that state. Many accept filings through NASAA’s Electronic Filing Depository. Deadlines and fees differ, and some states charge more for late filings, so track each state where an investor lives.
Late filings and preparation
Filing Form D on time is not itself a condition of the Rule 506 exemption. But Rule 507 makes Regulation D unavailable to an issuer that a court has enjoined for failing to comply with Rule 503, and the SEC can bring enforcement actions over missed filings. If a deadline slips, ask counsel how to fix it with the SEC and each state.
Prepare before the first close. A new filer applies for EDGAR access with a Form ID. The person filing also needs Login.gov credentials and an EDGAR role for the company from its account administrator. Once logged in, the online session ends one hour after the last keystroke, so gather the answers first.
Primary sources
General information, not legal, tax or investment advice. Your operating agreement, offering documents, counsel and CPA govern your deal.