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Laura Anthony, Attorney
Legal & Compliance, LLC
330 Clematis Street, Ste. 217
West Palm Beach, FL 33401

Toll Free: 1.800.341.2684
Phone: 561.514.0936
Fax: 561.514.0832


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Regulation D

A public company by definition, has public shareholders (a “shareholder base”) and these public shareholders have stock available for sale, either through an exchange or the over the counter market (“free trading stock”) such that new investors have the ability to buy such company’s stock if they so desire. Many companies go public and thereby obtain a shareholder base with free trading shares through an initial public offering, however there are alternatives.

Going Public with a Private Offering Using Regulation D

A Company that intends to go public can complete a private offering using Regulation D to establish their foundation for moving forward. The Company initiates a private offering with unaffiliated investors so that they may establish a free-trading shareholder base. The shares held by the unaffiliated shareholder base are initially restricted but become free trading either automatically following a one year holding period, or through the filing of a resale registration statement on Form S-1.

Following a one-year holding period, the Company may establish a relationship with a Market Maker in order to file a 15c2-11 application with FINRA. The 15c211 application is filed in order to obtain a trading symbol and also for permission to quote the stock on the open market. Upon issuance of the trading symbol, the Company stock would trade on the over the counter Pink Sheets.

Registration Statement is Filed

Alternatively, the Company could file a re-sale registration statement with the SEC to register the shares of the shareholder base. However, the re-sale registration statement cannot be filed until the private offering has been completed. Once again, the Company going public would initiate a relationship with a FINRA member Market Maker so that they may file a 15c2-11 application for permission to quote the stock and to obtain a trading symbol. Upon issuance of the trading symbol, the Company stock would trade on the Over the Counter Bulletin Board or OTCBB.

Another Method for Going Public

Regulation D Rule 504 offers a third method of going public. By relying on Rule 504 on the federal level, a Company can file a Registration Statement with state securities examiners to conduct a small business offering (under $1,000,000). Following approval by the state of that registration statement, shares sold in reliance on the registration statement would be free trading. Upon completing the registered state offering, the Company would again work with a Market Maker to file a 15c2-11 application with FINRA for permission to quote the stock and to obtain a trading symbol. Upon issuance of the trading symbol, the Company stock would trade on the Over the Counter Pink Sheets market or OTC market.


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