Reg A vs. Reg D: The Difference Explained
Regulation A and Regulation D are two of the main ways a company can sell securities in the United States without a full SEC registration statement. They solve different problems. Regulation A is a public offering exemption: the SEC staff reviews and qualifies an offering statement, and the company can market to the general public, with scaled-down disclosure. Regulation D is a set of private placement rules: there is no SEC qualification, the main rules are built around accredited investors, and the company files a short notice after it starts selling. This guide compares Reg A vs Reg D on the points that matter most to issuers and investors.
This is a general explanation and not legal advice. Both exemptions have detailed conditions, and the rule text on the eCFR and SEC.gov controls.
In brief
- Reg A requires an offering statement on Form 1-A that the SEC qualifies before sales; Tier 2 can raise up to $75 million in 12 months and Tier 1 up to $20 million.
- Reg D covers Rule 504 (up to $10 million in 12 months) and Rule 506 (no dollar limit); issuers file a Form D notice within 15 days after the first sale.
- Reg A allows general advertising; Rule 506(b) does not, and Rule 506(c) allows it only if all purchasers are verified accredited investors.
- Reg A securities may be sold to non-accredited investors subject to Tier 2 limits; Rule 506(b) allows a limited number of non-accredited purchasers; Rule 506(c) allows none.
The legal background
The Securities Act of 1933 requires that offers and sales of securities be registered unless an exemption applies. Registration involves a detailed filing and SEC review. The exemptions give smaller or private offerings a different path.
- Regulation A is built on Section 3(b) of the Securities Act. Rule 251 describes it as an exemption from registration for the public offer or sale of eligible securities.
- Regulation D includes Rules 501 to 508. Rule 506 is a safe harbor for the private placement exemption in Section 4(a)(2), meaning offers and sales that satisfy it are deemed not to involve a public offering. Rule 504 is a separate exemption under Section 3(b) for limited offerings.
Our guides on Regulation A Tier 1 versus Tier 2 and on Rule 506(b) versus Rule 506(c) cover each in more depth.
How each one works
Regulation A
The issuer prepares an offering statement on Form 1-A and files it on EDGAR. The SEC staff reviews it, and sales can begin only after qualification. The offering circular is delivered to investors. Offers can be made to the general public after filing, and testing-the-waters communications are allowed before and after filing within Rule 255. See our guide on how Regulation A works from Form 1-A to qualification.
Regulation D
Under Rule 506, the issuer relies on the conditions in the rule and files a Form D notice. The SEC does not review the offering before sales begin. Rule 503 requires the notice of sales on Form D no later than 15 calendar days after the first sale of securities in the offering, with a weekend or holiday rolling to the next business day. The SEC’s page on Form D explains that the date of first sale is when the first investor is irrevocably contractually committed to invest, and that the SEC charges no filing fee for a Form D or amendment.
Dollar limits
| Regulation A Tier 1 | Regulation A Tier 2 | Rule 504 | Rule 506 | |
|---|---|---|---|---|
| Limit | $20 million in 12 months | $75 million in 12 months | $10 million in 12 months | No dollar limit |
Sources: Rule 251(a) for Regulation A; the title and conditions of Rule 504 for its $10,000,000 limit, which counts securities sold within the 12 months before and during the offering; and the title of Rule 506, which provides an exemption “without regard to dollar amount of offering.” The SEC’s Rule 506(b) page also says issuers can raise an unlimited amount.
Who can invest
Regulation A
In Tier 1, Regulation A itself sets no investor qualification, though state law applies. In Tier 2, if the securities will not be listed on a national securities exchange upon qualification, a purchaser must be an accredited investor or limit the purchase to no more than 10 percent of the greater of annual income or net worth (natural persons) or of revenue or net assets (entities), under Rule 251(d)(2)(i)(C).
Regulation D, Rule 506(b)
The offering may include an unlimited number of accredited investors and no more than 35 non-accredited purchasers in any 90-calendar-day period. Each non-accredited purchaser, alone or with a purchaser representative, must have enough knowledge and experience in financial and business matters to evaluate the merits and risks, or the issuer must reasonably believe so. If any non-accredited investors take part, Rule 502(b) requires the issuer to furnish specified information, and the SEC notes it generally resembles the disclosure in Regulation A offerings.
Regulation D, Rule 506(c)
All purchasers must be accredited investors, and the issuer must take reasonable steps to verify that status. Rule 506(c)(2)(ii) lists non-exclusive methods, such as reviewing tax forms or bank and brokerage statements, or obtaining written confirmation from a registered broker-dealer, SEC-registered investment adviser, licensed attorney or certified public accountant.
Accredited investor, in brief
Rule 501(a) defines accredited investors. For natural persons it includes those with individual net worth, or joint net worth with a spouse or spousal equivalent, above $1 million, excluding the primary residence under the rule’s calculation, and those with individual income above $200,000 in each of the two most recent years, or joint income above $300,000, with a reasonable expectation of the same level in the current year. It also includes certain entities, institutions and holders of professional credentials the SEC has designated. Check the current text of Rule 501(a) before relying on any threshold.
Advertising and solicitation
- Regulation A: permitted after the offering statement is filed, with the required legends and offering circular access; testing the waters is allowed earlier under Rule 255.
- Rule 506(b): no general solicitation or general advertising. The SEC’s page lists this as a core requirement.
- Rule 506(c): general solicitation is allowed if all purchasers are accredited and the issuer verifies them.
- Rule 504: Rule 504(b)(1) relates the general solicitation limits to the state registration conditions it lists, so issuers should read the rule and consult counsel.
Disclosure, financial statements and ongoing duties
| Feature | Regulation A | Regulation D |
|---|---|---|
| Offering document | Offering circular on Form 1-A | No mandatory form for accredited-only offerings; specified information for non-accredited purchasers in 506(b) |
| Audited financials | Required in Tier 2; not required in Tier 1 unless already prepared | Depends on the type of purchasers and the rule; see Rule 502(b) |
| SEC review | Yes, qualification before sales | No review before sales; Form D notice after first sale |
| Ongoing reporting | Tier 1 exit report; Tier 2 Forms 1-K, 1-SA, 1-U | None under Regulation D itself |
| Antifraud rules | Apply | Apply |
The antifraud provisions of the securities laws apply to both, regardless of the information requirements, so any material misstatement can create liability.
State law
- Regulation A Tier 1 requires state registration or qualification in each state where securities are offered or sold.
- Regulation A Tier 2 is not subject to state registration or qualification but is subject to state antifraud authority, and state filing fees may apply.
- Rule 506 has federal preemption from state registration and qualification, but states can require notice filings and collect fees, as the SEC’s 506(c) page states.
Resale and liquidity
Purchasers in a Rule 506(c) offering receive restricted securities, according to the SEC. Restricted securities generally cannot be resold freely without registration or an exemption. For Regulation A, resale treatment and any trading market depend on the facts of the offering, such as any exchange listing. Prospective investors should read the offering documents and ask counsel.
Bad actor rules
Both exemptions include disqualification provisions for felons and other bad actors. Rule 262 applies to Regulation A, and Rule 506(d) applies to Rule 506 offerings. The SEC’s pages for Rule 506(c) and Regulation Crowdfunding also note a waiver process.
A worked comparison, with made-up scenarios
Scenario 1. A fictional startup wants to raise $3 million from ten accredited investors it already knows, with no advertising. Rule 506(b) fits: the amount has no cap, the investors are accredited and there is no general solicitation. It would file a Form D within 15 days after its first sale.
Scenario 2. The same startup wants to run a public online campaign. It cannot do so under 506(b). It could use 506(c) if every investor is accredited and verified, or Regulation A if it is willing to file Form 1-A, wait for qualification and, for Tier 2, provide audited financial statements.
Scenario 3. A company wants to raise $50 million and accept investments from the general public, including non-accredited investors. Rule 504 caps at $10 million. Rule 506(b) limits non-accredited purchasers. Rule 506(c) excludes them. Regulation A Tier 2 allows up to $75 million, with the 10 percent test for non-accredited purchasers of unlisted securities.
Common misconceptions
- “Reg D means no SEC involvement.” The SEC receives a Form D, can examine, and enforces antifraud rules.
- “Reg A means a registered IPO.” It is an exemption, with a qualified offering statement.
- “Accredited means sophisticated.” Accredited status is a legal category; sophistication is a separate standard in Rule 506(b).
- “A Form D is an application.” It is a notice; the exemption depends on meeting the rule’s conditions, not on filing.
- “You can use both at once without thought.” Integration rules in Rule 152 apply when offerings overlap, and the SEC’s guidance describes safe harbors.
FAQ
Is Reg A better than Reg D?
Neither is better in general. Reg A suits companies that want to reach the general public and are ready for SEC review and, in Tier 2, audited statements and ongoing reports. Reg D suits private raises, especially from accredited investors. The choice depends on amount, investor base, timing and cost.
Can a company use both in the same year?
Yes, if it satisfies the conditions of each and the integration analysis in Rule 152 does not combine them. Counsel usually reviews the timing and the solicitation methods before an issuer runs two exempt offerings.
Does Reg D require SEC approval?
No. Reg D has no pre-sale review. The issuer files a Form D notice within 15 calendar days after the first sale and remains responsible for meeting the rule’s conditions.
Do both allow non-accredited investors?
Reg A does, subject to the Tier 2 limit for unlisted securities. Rule 506(b) allows up to 35 non-accredited purchasers in a 90-day period, with information requirements. Rule 506(c) does not.
What is the filing fee for Form D or Form 1-A?
The SEC states it charges no filing fee for a Form D notice or amendment, and Rule 252(b) says no fee is payable for submitting or filing Form 1-A. Legal, audit and state costs are separate.
Which one lets a company advertise?
Reg A after filing, and Rule 506(c) if all purchasers are verified accredited investors. Rule 506(b) bars general solicitation.
Prepared with AI assistance from public sources and reviewed under our editorial policy. Not investment advice.
