ICO or VC Financing Checklist: SEC Form D Filing

If you’re looking to raise money for your startup, whether through a VC financing or an ICO, you need to be mindful of applicable securities laws.

Under U.S. federal securities laws, the offer and sale of securities must be either registered with the SEC or fall under an exemption from registration.  The term “securities” covers a wide array of financial instruments (including the broad category of “investment contracts” that has recently gained much attention in the ICO market).  SEC registration is a monumental undertaking typically reserved for IPOs, so early-stage companies should generally aim to fit their startup financing round or ICO within an available exemption from registration.  For a chart of the of the most common exemptions from registration, click here.

Most startups utilize an exemption from registration under Regulation D of the Securities Act.  Companies relying on a Regulation D exemption must file a brief notice called a Form D with the SEC after they first sell their securities.  In general, the Form D includes the names and addresses of the company’s management and promoters as well as some details about the offering, such as the amount of the offering and the number of purchasers.

This checklist provides a list of key information that must be disclosed in the Form D filing.

SEC Filer ID

Does the company have a Central Index Key (CIK) or EDGAR access codes with the SEC?  If not, the company will need to file a Form ID to obtain a CIK and EDGAR access codes prior to filing the Form D.

A Form ID must be filed with the SEC to obtain a CIK and EDGAR access codes.  To complete the Form ID, the company will need to provide the following:

1. Company Name (Full legal name of issuer)
2. Type of Entity (Form of business entity, such as corporation or limited liability company)
3. Mailing Address
4. Primary Business Address (if different from mailing address)
5. Telephone Number
6. Tax or Federal Identification Number
7. State of Incorporation
8. Fiscal Year End (month and day)
9. Contact Information (Name, Telephone Number, Mailing Address, and E-mail Address for person who will receive filing information and access codes from the SEC on behalf of the company. This person will have access to submit SEC filings through the SEC’s EDGAR website.)
10. Account Information (Name, Telephone Number and Mailing Address for person who will receive SEC account information and billing invoices from the SEC on behalf of the company)
11. Signature (Name and Title of person who will sign the Form ID on behalf of the company)

Form D

To complete the Form D, the company will need to provide the following:

1. Company Name (Full legal name of issuer)
2. Type of Entity (Form of business entity, such as corporation or limited liability company)
3. Jurisdiction of Incorporation
4. Date of Incorporation (Date on which company was officially formed)
5. Address (Must be a Physical Mailing Address; P.O. Box or “care of” addresses are not acceptable)
6. Directors (Name and Mailing Address of each person who is a Director of the company, or a person performing similar functions)
7. Executive Officers (Name and Mailing Address of each person who is an Executive Officer of the company, or a person performing similar functions)
8. Promoters (Name and Mailing Address of each person who has functioned as a Promoter of the company. This generally includes any person who (i) acting alone or with one or more other persons, directly or indirectly takes initiative in founding and organizing an issuer’s business and (ii) in connection therewith, directly or indirectly receives consideration equal to 10% or more of any class of the issuer’s securities or 10% or more of the proceeds from the sale of any class of the issuer’s securities; however, a person who receives securities or proceeds either solely as underwriting commissions or solely in consideration of property is not a promoter if that person does not otherwise take part in the founding and organizing the issuer’s business.)
9. Industry Group (Industry in which the company operates)
10. Issuer Size (Revenue Range or Aggregate Net Asset Value Range.  Companies may decline to disclose this information.)
11. Federal Exemptions and Exclusions Claimed (Type of exemption from SEC registration)
12. Type of Filing (New Notice or Amendment)
13. Duration of Offering (Does the company intend the offering to last more than one year?)
14. Types of Securities Offered (such as equity or debt)
15. Minimum Investment (Minimum dollar amount accepted from any investor)
16. Sales Compensation (Name, Central Registration Depository (CRD) number (if any) and Mailing Address for each person that has been or will be paid directly or indirectly any commission or other similar compensation in cash or other consideration in connection with sales of the issuer’s securities in the offering, including finders)
17. Offering Amount (Total offering amount)
18. Amount Sold (Total amount sold)
19. Amount Remaining (Total amount remaining to be sold)
20. Non-Accredited Investors (Number of non-accredited investors in the U.S.)
21. All Investors (Total number of investors)
22. Sales Commissions (Dollar amount of total sales commissions to be paid in connection with the offering)
23. Finders’ Fees (Dollar amount of total finders’ fees to be paid in connection with the offering)
24. Use of Proceeds (Dollar amount of proceeds from the offering that has been or is proposed to be used for payments to any of the directors, executive officers or promoters named above)
25. Signature (Name and Title of person who will sign the Form D on behalf of the company)

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