What Every Company Should Know About Unregistered Offerings

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April 16, 2025

What Every Company Should Know About Unregistered Offerings

When a company wants to raise money by selling shares or bonds, it usually has to “register” that sale with the U.S. Securities and Exchange Commission (SEC). But sometimes companies don’t go through this public registration process. Instead, they rely on certain legal exceptions that let them sell these investments privately—these are called unregistered offerings.

The legal foundation for these private sales comes from the Securities Act of 1933, which normally requires registration unless the sale falls under a specific exemption—such as Section 4(a)(2) or Regulation D.

Here are the main types of unregistered offerings:

Rule 144A offerings. These are large sales of securities, typically made to big financial institutions (called “qualified institutional buyers” or QIBs). The company sells the securities to a bank or other middleman, who immediately resells them to those institutions. This is a fast and efficient way to raise large amounts of money without registering the securities.
Regulation S offerings. These allow companies to sell securities outside the U.S. without registering with the SEC, as long as the sales follow certain rules. When combined with Rule 144A, these are called 144A/Reg S offerings, where U.S. institutions get the 144A side and non-U.S. investors get the Reg S side.
Traditional private placements. This means selling directly to a small group of investors, often wealthy individuals or institutions. These can be done under:
- Rule 504 (small offerings up to $10 million),
- Rule 506(b) (no advertising, but allows up to 35 non-accredited investors),
- Rule 506(c) (you can advertise, but only sell to verified accredited investors).
Medium-Term Notes (MTNs) and Commercial Paper. These are short- or medium-term loans raised by companies from institutional investors, often done continuously over time without registration.
PIPE transactions (Private Investment in Public Equity). These are special deals where public companies privately sell stock at a discount to raise quick capital, usually with a promise to register the shares later.

What’s not included?

This overview doesn’t cover:

Regulation A+ offerings (a hybrid between public and private),
Crowdfunding, or
Startup fundraising rounds like seed or angel investments.

Private offerings are faster and cheaper than public offerings, but they still have to follow the law. The SEC sets rules to prevent fraud and protect investors—even in private deals. Companies must also keep up with new regulations and legal updates, such as changes to the definition of “accredited investor” or what qualifies as general solicitation.

So, while unregistered offerings skip some steps, they’re still a tightly regulated and structured way for companies to raise money from select investors without going fully public.

Key Parties and Their Roles

An unregistered offering involves several parties, each with a specific role to make sure the process runs smoothly and complies with the law.

The Issuer
This is the company (or other entity) that is offering its securities—like shares or bonds—for sale. The issuer makes the main business decisions about the deal: what type of securities to offer, how much to raise, and when to do it. The issuer also provides information to investors about the company’s business and finances, which helps investors decide whether to buy.

Issuer’s Legal Counsel
The issuer’s lawyers handle the legal side of the transaction. They draft the key documents—especially the offering memorandum, which tells investors about the company and the investment terms. They also advise the issuer on how to follow federal and state securities laws, and help identify any legal risks involved.

Investment Banks (also called Placement Agents or Initial Purchasers)
If the issuer hires an investment bank, the bank’s job is to help structure the offering, figure out how to market it, and find suitable investors. In traditional private placements, the bank acts as a placement agent—matching the company with potential buyers but not buying the securities itself. In Rule 144A deals, the bank may act as an initial purchaser, buying the securities from the issuer and then quickly reselling them to large institutional investors.

Counsel to the Investment Banks
These are lawyers for the investment banks. Their primary job is legal due diligence: they review the issuer’s documents and business to make sure the information going to investors is accurate and complete. They also help draft or revise the offering documents and contracts. For debt deals, they usually draft key sections describing the securities and how they can be traded.

Auditors
If the issuer is providing financial statements to investors, auditors prepare or review them to confirm they are accurate. For some offerings, auditors also provide a “comfort letter” to the investment banks. This letter confirms that the financial disclosures are reliable, which helps the banks show they did proper due diligence.

Other Parties
Depending on the structure of the offering, other service providers may be involved:

A trustee is used in debt offerings (like Rule 144A deals) to represent the bondholders and help administer the terms of the debt.
A registrar and transfer agent may be used in equity offerings to keep track of who owns the securities and handle transfers between buyers.

Core Transaction Documents

In an unregistered securities offering, several key documents are used to explain the terms of the deal, set expectations, and protect all parties involved.

Offering Document
This is the main document that tells potential investors about the company and the securities being offered. It’s sometimes called an Offering Memorandum or Private Placement Memorandum (PPM). It includes details about the company’s business, financials, risks, and the terms of the investment. While it’s not filed with the SEC, everything in it must be accurate—because it’s still subject to U.S. anti-fraud laws.

Purchase or Subscription Agreement
This is the actual contract between the company and the investor. It states how many securities are being sold, at what price, and includes promises (called representations and warranties) by both sides. It may also include covenants (promises about what the company will or won’t do), and conditions that must be met before the sale is finalized.

Investor and Purchaser Representative Questionnaires
These are forms that investors fill out to confirm they’re legally allowed to participate—usually by proving they’re “accredited investors” or have sufficient knowledge to make an informed decision. The company relies on these questionnaires to avoid violating securities laws. In some cases, the investor may use a purchaser representative, and that person may also need to fill out a questionnaire.

Registration Rights Agreement
Sometimes, investors want the option to later sell their securities in a public market. This agreement gives them the right to demand that the company register those securities with the SEC in the future. It also sets deadlines and penalties (like extra interest) if the company doesn’t follow through on time.

Certificate of Designation & Debt Documents
If the company is offering special types of stock (like preferred shares), it may need a certificate of designation, which outlines the rights of those shareholders—like dividends, voting power, or liquidation rights. For debt offerings, the company uses debt agreements (like a promissory note or indenture) that spell out the terms of the loan, repayment, interest, and investor protections.

Solicitation and Advertising Materials
The kind of marketing the company is allowed to do depends on the legal exemption it’s using. Some rules (like Rule 506(b)) prohibit general advertising, while others (like Rule 506(c)) allow it—but only if the company takes extra steps to confirm all buyers are accredited. These rules affect how the company can communicate with the public or potential investors.

Together, these documents create the legal and commercial framework for the offering, and they help protect the company and investors from misunderstandings or legal risks.

The Offering Process

An unregistered offering involves several key steps, each designed to protect the parties involved and comply with securities laws. Here’s how the process typically works:

Drafting the Offering Document
The first big step is preparing the document that tells investors about the company and the investment terms. This is a team effort between the company, its lawyers, and (if involved) investment banks. The goal is to present a clear, compelling case to investors while making sure the disclosures are legally sound and don’t leave out anything material.

Due Diligence
Due diligence means thoroughly checking the company’s financials, business operations, contracts, and legal risks. Investment banks and their lawyers take the lead, asking detailed questions and reviewing documents. This step helps uncover potential problems and reduces the chance of liability for false or misleading statements.

Drafting and Negotiating Agreements
The main contracts—like the purchase agreement and, if applicable, a registration rights agreement—are negotiated next. If a placement agent is involved, it often negotiates terms up front with input from company counsel, anticipating what investors will want. If the company is dealing directly with investors, these agreements are customized through one-on-one or group negotiations. The goal is to reach a fair deal that reflects the risks and expectations of everyone involved.

Completing the Offering
Once investor commitments are in place, the company formally accepts the investments—this can involve signing contracts, sending out acceptance notices, or receiving funds. The company also needs to comply with state securities laws (often called Blue Sky laws), sometimes by filing notices or paying fees. If funds are collected before the offering is finalized, they may be held in escrow. Additional legal documents, like opinions from lawyers or comfort letters from auditors, may also be delivered at this stage to confirm everything is in order.

At the end of this process, the company receives the funds, and the investors receive their securities—subject to resale restrictions unless and until they’re registered or qualify for an exemption.

General Solicitation and Offering Communications

In some private offerings, companies are allowed to advertise or promote their deals more broadly—but only under certain rules.

Rule 506(c) Offerings
Under this rule, a company can advertise its offering to the public—through websites, social media, or even events. But there’s a catch: it must verify that every investor is accredited, meaning they meet specific income or net worth thresholds. It’s not enough for investors to simply say they qualify—the company must collect documents or use third-party verification.

Rule 144A Offerings
These are targeted at large institutions, called Qualified Institutional Buyers (QIBs). The law allows the company or its bank to advertise as long as they only sell to verified QIBs. The marketing can be broad, but the actual sale is limited to those institutions.

Permitted Communications Before an Offering
Some types of communication are allowed even before the company decides exactly which legal path it will take:

Rule 241 lets a company “test the waters”—it can reach out to gauge interest without committing to a specific exemption or deal. This is called a generic solicitation of interest, and it must include a disclaimer that no investment is being offered yet.
Rule 148 allows companies to participate in “demo day” events (like startup pitch sessions), where they can talk about their business and funding plans without it being considered general solicitation—but only if the event meets strict conditions. It must be hosted by a legitimate sponsor, like a university, government agency, or angel group, and not promote specific investment deals.

Regulatory Considerations
Even if general solicitation is allowed, the company must still avoid misleading statements. All communications are subject to antifraud laws, meaning they must be truthful and not leave out important information. Also, the SEC has rules about integration—meaning if a company does different types of offerings close together, they might get treated as one offering. That could affect which exemptions apply, so legal advice is often needed to manage timing and content.

Post-Closing and Compliance

After the unregistered offering is completed and the money is raised, the company still has a few legal responsibilities to follow through on. These help maintain compliance and protect investors’ rights moving forward.

Form D Filing
If the company relied on Regulation D to conduct the offering (which is common), it must file a short notice called Form D with the SEC. This must be done within 15 days of the first sale of securities. The form provides basic information about the company, the offering, and the amount raised.

Resale Restrictions
The securities sold in a private offering are considered “restricted”, meaning investors can’t freely sell them on the public market right away. If they want to resell, they must follow Rule 144, which sets holding periods and other conditions—especially for shares in non-public companies. This rule ensures that these privately sold securities don’t end up being traded like public ones without proper disclosures.

Registration Follow-Up
If the company promised investors the right to register their securities later—for example, to help them eventually sell their shares in the public market—it must file a registration statement with the SEC on time. These deadlines are typically set out in the registration rights agreement, and missing them can result in financial penalties, like paying additional interest.

Ongoing Reporting Obligations
For companies that weren’t previously filing public reports (called non-reporting issuers), granting registration rights or growing investor exposure may trigger new obligations under U.S. securities laws. This might mean regular filings with the SEC, financial disclosures, and adopting corporate governance practices similar to public companies. Legal counsel usually helps manage this transition.

Raising Capital Privately in the U.S.? We Help You Navigate Every Step

Conducting an unregistered offering is a strategic alternative to going public—and one that demands careful legal structuring. Our team guides U.S. and foreign issuers through every aspect of raising capital privately under exemptions like Rule 144A and Regulation D. Whether you're selling equity or debt, we provide the legal and regulatory clarity needed to execute your private placement effectively and compliantly
We assist with: Structuring offerings under Rule 144A, Reg S, or Regulation D; Drafting and reviewing offering memoranda and purchase agreements; Managing legal due diligence and disclosure strategy; Verifying investor accreditation and suitability; Preparing and negotiating registration rights agreements; Advising on resale restrictions and Rule 144 compliance; Filing Form D and handling Blue Sky law requirements
Whether you’re a late-stage startup, a private equity-backed company, or a foreign issuer accessing U.S. capital markets, we help you structure your deal to align with market norms, regulatory expectations, and investor demands. From strategy to execution, we don’t just help you close a deal—we help you do it right