“Understanding Rule 505: Exemption from Registration for Startups”

– Rule 505 provides an exemption from registration requirements for the offer and sale of securities up to $5 million within a 12-month period
– The offer or sale of securities under the Rule 505 exemption may be made to “accredited investors” and up to 35 other persons
– Buyers of stock sold under Rule 505 must buy the stock for investment purposes only and not for resale, and may not sell the stock for at least one year without registering the transaction 1. Purchasers of stock in a Rule 505 offering must be given financial statements certified by an independent public accountant.
2. Rule 505 offers an exemption from normal registration requirements but not from requirements related to fraudulent conduct and the use of misleading information.

https://www.knott-law.com/rule-505-exemption-registration-requirements-small-securities-offerings/