General Rules and Regulations
Securities Act of 1933
Rule 504 -- Exemption for Limited Offerings and Sales of Securities Not Exceeding $1,000,000
Exemption. Offers and sales of securities that
satisfy the conditions in paragraph (b) of this Rule 504 by an issuer that is not:
subject to the reporting requirements of section
13 or 15(d) of the Exchange Act,:
an investment company; or
a development stage company that either has no specific
business plan or purpose or has indicated that its business plan is to engage in
a merger or acquisition with an unidentified company or companies, or other entity
or person, shall be exempt from the provision of section
5 of the Act under section 3(b) of the Act.
Conditions to be met.
General conditions. To qualify for exemption
under this Rule 504, offers and sales must satisfy the terms and conditions of
Rule 501 and Rule 502 (a),
(c) and (d), except that the provisions of Rule 502 (c) and (d) will not apply
to offers and sales of securities under this Rule 504 that are made:
Exclusively in one or more states that provide for
the registration of the securities, and require the public filing and delivery to
investors of a substantive disclosure document before sale, and are made in accordance
with those state provisions;
In one or more states that have no provision for
the registration of the securities or the public filing or delivery of a disclosure
document before sale, if the securities have been registered in at least one state
that provides for such registration, public filing and delivery before sale, offers
and sales are made in that state in accordance with such provisions, and the disclosure
document is delivered before sale to all purchasers (including those in the states
that have no such procedure); or
Exclusively according to state law exemptions
from registration that permit general solicitation and general advertising so
long as sales are made only to "accredited investors" as defined in
The aggregate offering price for an offering of
securities under this Rule 504, as defined in Rule 501(c), shall not exceed $1,000,000,
less the aggregate offering price for all securities sold within the twelve months
before the start of and during the offering of securities under this Rule 504,
in reliance on any exemption under section 3(b),
or in violation of section 5(a) of the Securities
Note 1: The calculation of the aggregate offering
price is illustrated as follows:
If an issuer sold $900,000 on June 1, 1987 under this Rule 504 and an additional
$4,100,000 on December 1, 1987 under Rule 505, the issuer
could not sell any of its securities under this Rule 504 until December 1, 1988.
Until then the issuer must count the December 1, 1987 sale towards the $1,000,000
limit within the preceding twelve months.
Note 2: If a transaction under Rule 504 fails to
meet the limitation on the aggregate offering price, it does not affect the availability
of this Rule 504 for the other transactions considered in applying such limitation.
For example, if an issuer sold $1,000,000 worth of its securities on January 1,
1988 under this Rule 504 and an additional $500,000 worth on July 1, 1988, this
Rule 504 would not be available for the later sale, but would still be applicable
to the January 1, 1988 sale.
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