MegaCorp wishes to sell $25 million of securities.The only investors will be 20 institutional buyers.Which of the following applies to this offering?

Question

Quizplus · Accepted Answer

Rule 506 allows for the sale of securities to an unlimited number of accredited investors and up to 35 non-accredited investors, and there is no limit on the amount that can be raised. It is commonly used for private placements and is exempt from SEC registration requirements under certain conditions. Since MegaCorp is only selling to institutional buyers (who are likely accredited investors) and the offering size is $25 million (well below the Rule 506 limit), this rule would apply to their offering.

MegaCorp Wishes to Sell $25 Million of Securities