SEC Regulation D, Rule 506(c) + Nevada State Exemption Filing for Security Token
As part of our double token + common shares business plan for CORCOM INC (corcom.io) , and as we continue to plan and develop crypto tech, we recently developed a pooled investment fund interests (PIFI) agreement for accredited investors to purchase our digital CRS ( COR Security Token ) . The CRS token has no voting right but does have a profit sharing right. Our COR token (COR Utility Token) is the utlity token of the core component matrix and has no voting right and no profit sharing right. The agreement and function are shown here for reference and use or modification by others.
In order to simplify our initial process, keep costs low and reduce registration requirements we evaluted Regulation D exemptions. We found several options and chose our exemption through the process of elimination. Regulation D Rule 505 doesn’t exist anymore, Rule 504 has a funding cap and isn’t honored as exempt from registraion in Nevada, and Rule 506(b) doesn’t allow solliciation .. so we arrived at Rule 506(c) which doesn’t have a funding cap, allows solicitation, and is honored in Nevada. It does require that all investors be accredited and that the securities are restricted and subject to a 12 month holding period. Consdering the risk and newness of these invesmtents, this seems reasonable and like a good place to start anyway.
Here are the links and explanation text from the State of Nevada:
And here’s what we sent to the State of Nevada after paying the state exemption filing fee online:
The state filing followed the process of filing a Form D notice with the SEC noting Regulation D, Rule 506(c), as described here:
The SEC has a pretty straightforward website for filing the Form D:
This worked well for us after a few tries, so, to save some time, please note that the EDGAR system supports Internet Explorer 8 and Firefox 24 and you run in to errors if the pop-up blocker is enabled. For additional FAQ info and answers go here.
Now that we’ve filed the form D online with the SEC, paid the state exemption fee and filed the exemption with the state of Nevada, we are offering CRS token, as described above, to accredited investors and looking ahead to what’s next: a 12 month holding period and consideration of how rule 144 might apply to the CRS token in some cases:
Stay tuned. :)