What Is A Regulation D Exemption In Film And Television?

According to the Securities Act of 1993, Securities and Exchange Commission (SEC) Regulation D provides exemptions from registration requirements for film and television productions.

This means you do not have to pay a hefty amount associated with an initial public offering (IPO). According to the Securities Act, Regulation D provides several exemptions from registration requirements. Moreover, it permits organizations to provide and sell their securities without providing an offering to the SEC or advance federal registration.

Understanding The Regulation D Exemption In The Entertainment Industry

Acquiring investors and keeping their support is a key element for a successful film or television production. Therefore, filmmakers should be familiar with the Regulation D exemption in order to acquire capital from investors.

It is important to understand the legal aspects of investing in entertainment. There are specific legal guidelines specified by the SEC that regulate the shares in any film business and how they need to be sold.

The Regulation D exemption provides filmmakers the ability to raise money from investors without having to register their securities with the SEC. If you need assistance with Regulation D, an entertainment lawyer can help you navigate the legal requirements of Regulation D and ensure your projects are compliant with the law.

Exemption In Film And Television

What Exemptions From Federal Registration Are Available Under Regulation D?

Unless filmmakers understand the exemptions from SEC registration, they will needlessly spend money on the registration process. Filmmakers looking to raise capital have three different exemptions available to them under Regulation D.

These include:

  • Rule 504, which allows for the sale of up to $5 million worth of securities in a 12-month period;
  • Rule 505 allows companies to decide what information to give to accredited investors, provided that it does not violate the antifraud prohibitions of federal securities laws;
  • Rule 506 bans general advertising and allows for the sale of an unlimited amount of securities but only to a limited number of accredited investors.

These three exemptions under Regulation D allow filmmakers to raise capital without having to register their securities with the SEC. Film businesses in the entertainment industry should keep in mind that the securities offered must meet certain criteria specified by the SEC, like requiring investors to be accredited.

What are the requirements of SEC Regulation D?

Even if the Regulation D transaction includes one or two investors, the company needs to have a complete framework along with documents specifying disclosure. It’s required to fill out Form D electronically with the Securities and Exchange Commission (SEC) after the sale of the first securities. 

The form contains the complete names and addresses of all of the company’s officials, including directors and executives. Furthermore, some additional details may also be required. 

Rule 506 of Regulation D states “The company will not use general solicitation or advertising in order to market their securities.” Moreover, the company may sell its securities to an unlimited number of accredited investors, or up to a limit of 35 purchasers. 

Anyone filling out this form must also include a history of certain adverse information as well, such as criminal convictions. The SEC also requires that the company provides all necessary details so investors can understand what they are investing in.

It is important to note that Regulation D does not exempt companies from civil liability, antifraud, and other important provisions mentioned in federal securities laws.

Constraints of SEC Regulation D

All the advantages of Regulation D are available to the issuer of the securities. However, the exemptions apply to the transactions and not to the securities themselves.


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