RE:Private PlacementsHi there,
I asked ChatGPT the following question in regards to your question/post :
Question : Is it required by Canadian or US law to disclose the names/entities participating in the Buy of a Private Placement?
ChatGPT answer :
In both Canada and the United States, the regulations around the disclosure of participants in a private placement can be quite nuanced and are generally influenced by securities laws. Here's an overview of the requirements in each country:
United States
In the U.S., private placements are typically conducted under Regulation D of the Securities Act of 1933. The specific requirements can depend on the exemption being used (e.g., Rule 506(b) or Rule 506(c)):
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Rule 506(b): This rule allows companies to raise an unlimited amount of money from accredited investors and up to 35 non-accredited investors. There is no general solicitation or advertising allowed. The names of investors are not required to be disclosed publicly, but detailed information must be provided to non-accredited investors, and the company must file Form D with the SEC, which includes general information about the offering but not the identities of the investors.
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Rule 506(c): This rule permits general solicitation and advertising but all investors must be accredited. The issuer must take reasonable steps to verify that all purchasers are accredited investors. Similar to Rule 506(b), the names of the investors are not disclosed publicly, but the issuer must file Form D with the SEC.
In both cases, while the specific identities of investors are not disclosed in the Form D filing, the form does provide a broad overview of the offering, including the amount raised and some other non-identifying details.
Canada
In Canada, private placements are regulated under National Instrument 45-106 (NI 45-106) – Prospectus Exemptions. Similar to the U.S., there are various exemptions under which a private placement can be conducted, including the accredited investor exemption and the offering memorandum exemption:
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Accredited Investor Exemption: Under this exemption, companies can raise funds without providing a prospectus, as long as the investors are accredited. The company must file a report of exempt distribution (Form 45-106F1) with the relevant provincial securities commissions, which includes detailed information about the offering and the investors. However, the identities of the investors are generally not made public.
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Offering Memorandum Exemption: Companies using this exemption must provide a detailed offering memorandum to potential investors. The report of exempt distribution is also required to be filed, similar to the accredited investor exemption, and it includes information about the offering but typically does not publicly disclose the identities of the investors.
Summary
In summary, neither U.S. nor Canadian laws require the public disclosure of the names or entities participating in a private placement. However, detailed information about the offering, including the total amount raised and the types of investors, must be filed with the respective securities regulatory authorities. These filings are generally available to the public, but the specific identities of the investors are not disclosed.
Cheers!!
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