The internet can give an offer a wider audience than the investors permitted to buy. The SEC’s final rule published November 21, 2016 addresses that mismatch through new Rule 147A: offers are not geographically restricted, but sales remain limited to residents of the issuer’s state or territory. Wider visibility is not authorization for unrestricted interstate sales. [2016-26348]

The new route also permits incorporation or organization outside the state where the offering occurs, subject to conditions demonstrating the business’s in-state nature. Amended Rule 147 retains in-state offers and sales. Applicable state securities law remains in place under both. Our competition reading is that communication and organizational flexibility may remove particular constraints, without erasing the local character of the exemption. [2016-26348]

The November 2015 proposal illustrates how the design evolved. It contemplated removing offer restrictions through changes to Rule 147 and proposed basing issuer location on its principal place of business rather than principal office. That earlier approach supplies useful context for the final alternatives, not a license to apply every proposed Rule 147 provision as adopted law. [2016-26348][2015-28219]

Both intrastate rules take effect April 20, 2017. Separately, Rule 504’s issuer limit rises from $1 million to $5 million over twelve months, with certain bad-actor disqualifications, effective January 20; Rule 505 disappears May 22. The two releases belong to one SEC chain. They identify mechanisms intended to facilitate financing, not independent evidence of more entrants, lower capital costs or successful fundraising. [2016-26348][2015-28219]

Source documents

  1. Exemptions To Facilitate Intrastate and Regional Securities Offeringshttps://www.govinfo.gov/content/pkg/FR-2016-11-21/html/2016-26348.htm
  2. Exemptions To Facilitate Intrastate and Regional Securities Offeringshttps://www.govinfo.gov/content/pkg/FR-2015-11-10/html/2015-28219.htm