506x | 2025 |

506(b) vs. 506(c) Offerings: A Guide for Private Funds - Carta

: The issuer must have a "reasonable belief" that the investor is accredited, often based on the investor's own questionnaire. Rule 506(c): The "General Solicitation" Exemption 506(b) vs

The most helpful articles on this topic often compare its two primary "safe harbors": and Rule 506(c) . Rule 506(b): The Private Placement Standard Rule 506(b): The Private Placement Standard Introduced by

Introduced by the JOBS Act, this rule allows for much broader marketing of a deal. Comparison at a Glance Rule 506(b) Rule 506(c)

: Companies can sell to an unlimited number of Accredited Investors and up to 35 "sophisticated" non-accredited investors.

: Issuers must take "reasonable steps" to verify an investor’s status, such as reviewing tax returns or bank statements, rather than just relying on the investor's word. Comparison at a Glance Rule 506(b) Rule 506(c) Public Advertising Prohibited Accredited Investors Non-Accredited Investors Up to 35 (must be sophisticated) None Allowed Verification Method "Reasonable Belief" "Reasonable Steps to Verify"

: Issuers are strictly prohibited from using public advertising or "general solicitation" to market the deal.