Corporate Finance & Securities

Raising Capital in Washington State: Part 3

Recently, I provided an overview of raising capital under Washington state’s WAC 460-44A-504 (Rule 504). Today, I’m going to explain another exemption provided for by federal and state securities law under which a company can raise capital.

The Washington Uniform Limited Offering Exemption (ULOE), codified in WAC 460-44A-505 (Rule 505), allows for an offering amount up to a maximum of $5,000,000 regardless of the location of investors. Additionally, this type of offering requires that:

1)      The offering cannot be sold to more than 35 non-accredited investors, regardless of residency;

2)      You can sell to an unlimited number of accredited investors;

Disclosure Requirements

As discussed in our last post, the Securities Act of 1933 and 1934 were primarily put into place to protect investors in the wake of the stock market crash of 1929. In light of this, the most important factor in any securities offering is the disclosure of risks associated with the investments. Under the ULOE exemption, there is no prescribed format for presenting the disclosure document, but you must disclose all the material information necessary to allow potential investors to make an informed decision. The Securities Division of Washington recommends that you use a document called the Small Company Offering Registration Form U-7 (See here) to help guide the process of risk disclosures.

Filing Procedures

The Department of Financial Institutions has a great outline on it’s website of the filing procedures required for this type of offering. We always urge you to connect with an attorney to discuss your securities offering to make sure you comply with the various requirements, as federal and state securities laws are complex and there are various hurdles that may trip you up along the way if you’re not experienced with securities regulations.

If you’re interested in learning more about Rule 505 or other ways to raise capital for your business, please contact us today.


Collin Roberts

When he's not in the office, Collin enjoys IPAs and burgers at Latona Pub.

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