Raising Capital Gets a Bit Easier with New SEC Rule
Long-standing securities laws have constrained the ability of private companies to publicly promote their capital-raising efforts.
Now, after years of consideration and many delays, the Securities and Exchange Commission has rolled out a new rule lifting the ban on general solicitation for private offerings.
So notes Roger Quinland, a partner at Gordon & Rees, and Nancy Cass, co-founder of MerchantCass Advisors. They outline the new rule, known as 506(c), in an article being prepared for the next print issue of Franchise Times.
Here’s the short story: As of September 23, businesses can use general solicitation, otherwise known as advertising targeted to the public at large, to offer securities to investors.
They call the change a “revolutionary” method of fund-raising for franchise companies, but add detailed caveats. Business owners should check with their advisers—and read the full article in the November/December issue.