A Regulation D offering may be sold to a maximum of how many nonaccredited investors?

A Regulation D offering, specifically under Rule 506(b), permits the sale of securities to a limited number of nonaccredited investors, and that limit is set at 35. This is significant because it allows issuers to raise capital while still being able to include a small number of investors who do not meet the accredited investor criteria, thereby widening the pool of potential investors to a certain extent.

The rationale behind allowing a maximum of 35 nonaccredited investors is tied to the regulatory aim of protecting less sophisticated investors. While companies can raise funds through private placements, they must still ensure that there is a certain level of investor sophistication and capability to bear the risks involved. Consequently, allowing for this limited participation helps issuers balance the need for capital while still adhering to investor safeguards.

In contrast, other options exceed this number, which would not comply with Regulation D guidelines. If a company wished to include more than 35 nonaccredited investors, it would need to seek alternative exemptions or compliance routes, which might entail more rigorous disclosure requirements and potentially a more extensive regulatory burden. Thus, understanding the limit of 35 is essential for navigating private placements in compliance with Regulation D.