SEC Form D is used by issuers of securities to file with the SEC the intention to rely on an exemption from securities registration under Regulation D of the Securities Act of 1933. The Form D is filed electronically with the SEC typically within 15 days of the first sale of securities in connection with the exempt offering.
Previous to this year, comparable filings with the states to notice file the issuer’s intention to rely on the federal Regulation D exemption required a paper filing with each state securities regulator in which the offering would be conducted along with a filing fee. Issuers who conducted its Reg. D offering in multiple states were required to incur the time and expense of filing with each state.
Now, since early this year, the North America Securities Administrators Association (NASAA), an organization consisting of the state securities regulators of all 50 states and the District of Columbia, has made available an electronic system for filing the Form D’s in almost every state via NASAA’s Electronic Filing Depository (EFD). The EFD is currently only available to issuers who are relying upon the Rule 506 exemption under Regulation D. It is expected that the EFD will be expanded in the future to accommodate filings for additional exemptions with the state securities regulators.
The EFD not only allows the issuer to make all of its required Rule 506 state exemption filings but also results in a uniform filing system among the various states. Previously, the paper filings with the states could include on a state-by-state basis, additional supplemental filings in addition to Form D.
The EFD is available 24/7 for filers and collects filing fees as well as a one-time $150 system use fee for each offering utilizing the system. Some states have already made it mandatory for Rule 506 issuers to file electronically. Others have made it optional so that the issuer can still make a paper filing with such states and some states have not yet adopted the EFD for use by issuers in their state. One such state is New York, although the New York securities administrator is apparently considering its adoption. New York has been a problematic state for issuers in terms of the timing of its filing requirement (i.e., the filing is required prior to an offer to any person in the State) and the New York Form 99’s requirement for the issuer and its officers and directors to list their participation in prior distributions.
It is hoped that if New York adopts the use of the EFD system for issuers offering securities under Rule 506 in the State of New York that the New York requirement to file will be uniform with all other states (i.e., within 15 days of the first sale in the state).