Policy regarding new SEC Rules as of October 25, 2013

Angel Capital Association (ACA) guidance on these matters: www.angelcapitalassociation.org

506(b) or 506(c) offerings

Quiet vs. Loud

  • NTAN welcomes applicants making either type of offering.
  • All applicants are expected to understand SEC regulations.
  • We have a clear preference for Quiet offerings.
  • NTAN meetings will not cause an issuer to be considered Loud.
  • NTAN term-sheets will require the issuer to provide a legal opinion letter that it has complied with all applicable SEC regulations.
  • NTAN term-sheets for Quiet offerings may specify no Loud activities for 6 months.

Certification of Investors

  • We require that issuers use the SEC prescribed “principles‐based methodology” (PBM) to verify our members are accredited investors.
  • Our members will not provide personal financial data to companies seeking investment.
  • Loud issuers must take “reasonable steps to verify” that all purchasers are accredited.
  • Absolute proof is not the standard.
  • Issuers must document steps taken to verify.
  • NTAN will provide written confirmation that an investing member is in good standing.
  • The SEC provided four non‐mandatory, non‐exclusive verification methods.
  • Place costly and dangerous burdens on both entrepreneurs and investors.
    • on both entrepreneurs and investors.
    • Raise untenable privacy concerns.
    • NTAN members generally will not provide financial data per these methods.

Bad Actors

  • Both 506(b) AND 506(c) Issuers are subject to these very broad limitations.

Every issuer and investor should consult legal counsel regarding these matters.