Rule 506 of Regulation D

Rule 506 of Regulation D allows companies to raise investment capital by selling securities privately to a limited number of investors without registering with the SEC. It enables a company to raise unlimited funds from accredited investors—those with significant income or wealth—or up to 35 non-accredited investors, provided they have sufficient knowledge. The offering must still comply with specific disclosure and anti-fraud rules, but it is generally less burdensome and costly than a public offering. This rule helps startups and small businesses access investment more flexibly while maintaining investor protections.