Key Takeaways

Transcript

Hi, this is Tilden Moschetti of the Moschetti Syndication Law Group. In order to have a Reg D offering that’s truly underneath Reg D, we need to file with the SEC a form that’s known as Form D. We’re going to go through the four pages of that form. Today, it’s four pages long plus instructions. So stay tuned.

What Form D Is and Why It Matters

In this video, I’m going to do something I don’t think any attorney has ever done before. I’m going to walk you through step by step, the Form D that gets filed with the SEC and ultimately lives in their EDGAR database. I don’t think it’s been done before. And so we are going to do it right now. Let’s do it.

It’s helpful to have the form in front of us so we know exactly what we’re talking about. So you can see here this is indeed Form D, the Securities and Exchange Commission.

Item 1–2: Issuer Identity and Contact Information

Item one is the issuer’s identity. What the issuer identity is, is what entity is ultimately filing this security with the SEC. So this isn’t the sponsor information. This is the investment entity’s information. It has the name of the issuer, the jurisdiction of incorporation. So if it’s a Delaware LLC, or a Nevada LLC, or wherever it is, that’s the jurisdiction that it’s in. If it’s ever been in existence before, there are some previous names that go here. And then here’s where we choose entity type. Almost all of my clients choose LLC. Occasionally, for business clients, we choose a corporation that might make sense. It really depends on your specific situation.

Year of incorporation, most of mine are fairly new that I file, so it’s almost always within the last five years. And then they want you to put in the year that it was formed. So we do that like that.

Then we get to the principal place of business and contact information. Now this most of the time is you as the sponsor, your information, or really whoever it means to get in touch and contact with. So this is going to be just the address for notifications and a phone number.

Item 3–4: Related Persons and Industry Classification

Item three, this is the related persons. Now this is where 99.9% of the time I’m looking for who’s going to be the executive officer that’s going to be involved. Now the executive officer could be the manager of an LLC, or it could be the manager of the manager of the LLC. It’s that person who’s probably the key contact, the key decision maker.

So there it’s just last name, first name, middle name, street address contact information. And almost always I use executive officer, though it could be director or promoter in specific circumstances.

Item four is the industry group. Now this is mostly so that the SEC can keep track of what industries are generally using Reg D. Most of mine are either in real estate, technology, business services, or private equity, depending on the offering.

Issuer Size and Exemption Selection

Issuer size looks at revenue range or aggregate net asset value. Sometimes we disclose, sometimes we decline—it depends on the business and strategy.

Now the exemption: this is where we select Rule 506(b) or Rule 506(c). I do not use Rule 504. Almost everything I do is 506(b) or 506(c).

Investment Company Act and Filing Type

Now over here is the Investment Company Act section. For most real estate offerings, this does not apply. Occasionally it does, but most of the time it does not.

Type of filing is usually a new notice. Amendments are used if something changes. The date of first sale is the date money actually became committed.

Offering Duration and Type of Security

Reg D offerings are generally valid for one year. If longer, renewals are required.

Types of securities offered are usually equity or debt interests. Options, warrants, and more exotic securities are rarely used in syndications.

Page 3: Minimum Investment and Sales Compensation

Minimum investment is whatever is stated in your PPM—$25,000, $50,000, $100,000, etc.

Sales compensation should only be completed if a licensed broker-dealer is involved. Paying finder’s fees is extremely risky and strongly discouraged.

Offering Amounts and Investor Counts

Item 13 covers total offering amount, amount sold, and amount remaining.

The investor section asks whether non-accredited investors are allowed (506(b)) and how many investors have already invested.

Finder’s Fees and Use of Proceeds

Line 15 addresses commissions and finder’s fees—again, avoid these unless using a broker-dealer.

Item 16 is use of proceeds, typically showing acquisition fees, management fees, or similar sponsor compensation.

Signatures, Continuation Pages, and EDGAR Filing

The final section is the signature block, signed by an executive officer.

Continuation pages are only used if there are multiple issuers, related persons, or compensation recipients.

Form D is filed electronically through the SEC’s EDGAR system using the issuer’s CIK.

Final Thoughts on Form D Compliance

I hope that you found that helpful to walk through Form D, give you an idea about what to expect when you’re filing it. If you need help getting this done, my law firm will certainly be happy to help you. We represent people doing offerings under Regulation D Rule 506b and 506c, and that is all we do.