Missed or late Form D filing: what the rules say and where state notice filings fit

The deadline, briefly

An issuer relying on Rule 504 or Rule 506 must file a notice of sales on Form D no later than 15 calendar days after the first sale of securities in the offering, with the date moving to the next business day when it falls on a weekend or holiday. Source: 17 CFR 230.503(a)(1), https://www.ecfr.gov/current/title-17/section-230.503 Our post on using convertible notes to raise capital without losing control walks through that 15-day rule in the context of a note round. This post picks up where that one stops: what the rules say when the filing comes in late, or not at all.

What the rules say a late filing does

Form D filing is mandatory, but it is not a condition of the Rule 506 exemption. Rule 506(b)(1) requires compliance with Rules 501 and 502. Rule 506(c)(1) requires compliance with Rules 501 and 502(a) and (d). Neither incorporates Rule 503 as an exemption condition. This distinction does not excuse a missed filing or establish that the offering satisfies the other exemption requirements. Source: 17 CFR 230.503(a)(1), 230.506(b)(1), (c)(1). https://www.ecfr.gov/current/title-17/section-230.503 ; https://www.ecfr.gov/current/title-17/section-230.506

Rule 507 ties disqualification to a court order. Rule 507(a) makes the Rule 504 and Rule 506 exemptions unavailable to an issuer if the issuer, any of its predecessors, or any of its affiliates has been subject to an order, judgment, or decree of a court of competent jurisdiction temporarily, preliminarily, or permanently enjoining that person for failure to comply with Rule 503. Source: 17 CFR 230.507(a), https://www.ecfr.gov/current/title-17/section-230.507 Under Rule 507(b), that disqualification does not apply if the Commission determines, on a showing of good cause, that denying the exemption is not necessary under the circumstances. Source: 17 CFR 230.507(b), same URL

Compliance with Regulation D is still required. Rule 503(a)(1) says the issuer "must file." Rule 508(b) states that a transaction made in reliance on Rule 504 or Rule 506 shall comply with all applicable terms, conditions, and requirements of Regulation D. Source: 17 CFR 230.508(b), https://www.ecfr.gov/current/title-17/section-230.508 Rule 508(b) also states that where an exemption rests only on Rule 508(a)'s insignificant-deviation provision, the failure to comply remains actionable by the Commission under section 20 of the Securities Act. Same source.

Put together: missing the Form D deadline violates Rule 503, but does not by itself automatically eliminate an otherwise available Rule 506 exemption. A qualifying injunction against the issuer, a predecessor, or an affiliate can trigger Rule 507 disqualification, subject to SEC relief. A late filing does not establish compliance with the other requirements of the exemption.

Amendments: the filing that gets missed after the first one

A company can file the initial Form D on time and still fall behind later. Rule 503(a)(3) requires an amendment to a previously filed Form D:

• To correct a material mistake of fact or error in the filed notice, as soon as practicable after discovering it.
• To reflect a change in the information provided, as soon as practicable after the change, subject to a list of changes that do not require an amendment.
• Annually, on or before the first anniversary of the most recent filing, if the offering is continuing at that time.

Source for all three: 17 CFR 230.503(a)(3), https://www.ecfr.gov/current/title-17/section-230.503

A round that stays open for more than a year, such as a rolling SAFE or note round, is a setting where the annual amendment can come due. Whether a particular change in your offering requires an amendment depends on the facts and on the rule's list of exceptions.

Where state notice filings fit

Federal law limits state registration of certain exempt offerings, but it does not take states out of the picture.

The federal preemption. Securities offered and sold in transactions qualifying under Rule 506 are covered securities under section 18(b)(4)(F) of the Securities Act. Section 18(a) generally preempts state registration or qualification requirements for those securities and transactions. Rule 506(a) connects qualifying Rule 506 offerings to section 4(a)(2), and section 18(b)(4)(F) covers transactions exempt under SEC rules issued under that provision. Section 18(b)(4)(F) also preserves specified state notice-filing authority. Sources: 17 CFR 230.506(a); 15 U.S.C. 77r(a), (b)(4)(F). https://www.ecfr.gov/current/title-17/section-230.506 ; https://www.govinfo.gov/link/uscode/15/77r?link-type=html

What states keep. Section 18(c)(2)(A) preserves a state securities regulator's authority to require the filing of documents filed with the SEC, reports of the value of securities sold to persons located in the state, a consent to service of process, and payment of fees, for notice purposes. Source: 15 U.S.C. 77r(c)(2)(A), https://www.govinfo.gov/link/uscode/15/77r?link-type=html

States also retain antifraud enforcement authority and may suspend offers or sales within the state for failure to submit a permitted filing or fee. Source: 15 U.S.C. 77r(c)(1), (3). https://www.govinfo.gov/link/uscode/15/77r?link-type=html

In practice, this means a Rule 506 raise can carry state notice filing and fee obligations in the states where investors are located. Those rules vary, and this post does not survey them. A late federal Form D and a late state notice are separate questions, and both belong on the list when a gap is found.

Securities questions, including Form D amendments and state notice filings, are handled through the firm's of counsel. The firm's securities of-counsel: Arizona law practice temporarily authorized pending admission under Rule 39(b). Supervision by Nadine Deeb, a member of the State Bar of Arizona. Our securities law page explains how that work fits alongside your financing documents.

If you find a gap

If a Form D or a state notice filing was missed or filed late, what to do about that specific gap is a question for securities counsel. The answer depends on the offering, the investors' states, the timeline, and whether the round is still open. If you are weighing instruments for your next raise, our post on SAFEs versus convertible notes covers the business side of that choice.

Where this fits in the raise

Nadine Deeb drafts the financing instruments themselves, such as SAFEs, convertible notes, and investor documents. Securities questions are handled through the firm's of counsel, including exemption analysis, Form D, and state notice filings. The firm's securities of-counsel: Arizona law practice temporarily authorized pending admission under Rule 39(b). Supervision by Nadine Deeb, a member of the State Bar of Arizona. You can read more about how the firm's of counsel supports securities compliance for growing companies.

Schedule a Consultation. If you are planning a raise or think a Form D or state notice may be missing, you can schedule an initial consultation with Accord & Shield Legal to discuss your company, timing, and the scope of potential legal work. Securities questions are handled through the firm’s of counsel. The firm's securities of-counsel: Arizona law practice temporarily authorized pending admission under Rule 39(b). Supervision by Nadine Deeb, a member of the State Bar of Arizona.

This article is general information, not legal advice. Reading it does not create an attorney-client relationship. Consult a qualified attorney about your specific situation.