[1] A Regulation D offering is intended to make access to the capital markets possible for small companies that could not otherwise bear the costs of a normal SEC registration.
[2] Reg D is composed of various rules prescribing the qualifications needed to meet exemptions from registration requirements for the issuance of securities.
Rule 501 of Reg D contains definitions that apply to the rest of Reg D. Rule 502 contains the general conditions that must be met to take advantage of the exemptions under Regulation D. Generally speaking, these conditions are (1) that all sales within a certain time period that are part of the same Reg D offering must be "integrated", meaning they must be treated as one offering, (2) information and disclosures must be provided, (3) there must be no "general solicitation", and (4) that the securities being sold contain restrictions on their resale.
It also provides (in Rule 506) a "safe harbor" under §4(a)(2) of the '33 Act (which says that non-public offerings are exempt from the registration requirement).
In other words, if an issuer complies with the requirements of Rule 506, it can be assured that its offering is "non-public," and thus that it is exempt from registration.
Unlike Rule 505, all non-accredited investors, either alone or with a purchaser representative, must be sophisticated – that is, they must have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective investment.
[7] These new regulations add Rule 506(c) to allow general solicitation and advertising for a private placement offering.