03/28/2023
As an apartment investor, you'll need to be well versed on 506(b) versus 506(C) offerings.
The 506(B) offerings are: "considered a safe harbor" under Section 4(a)(2). It provides objective standards that a company can rely on to meet the requirements of Section 4(a)(2). Essentially, 506(b) offerings allow investors to raise an unlimited amount of accredited investors (and even up to 35 non-accredited investors) without needing to file with the SEC however 506(b) offerings do not allow investors to solicit other investors. Instead, they have to have established relationships with investors they reach out to.
A 506(C) offering "permits issuers to broadly solicit in generally advertised and offering, provided that:
- All purchasers in the offerings are accredited investors
- The issuer takes reasonable steps to verify the purchasers' accredited investor status and
- Certain other conditions in Regulation D are satisfied"
Essentially, 506(c) offerings "can" solicit investors and advertise their offerings, --with a few exceptions and verifications.
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