Under Rule 506 ©, a company may generally solicit its offering. Currently, all that is required for Rule 506© is to take reasonable steps to verify that all purchasers are accredited investors. However, the SEC is proposing additional requirements for Rule 506©, chief among them being the Advance Form D. Under the current Rule 506 system, a company only needs to file its Form D within 15 days of the first sale. However, the Advance Form D rule requires the filing of a Form D at least 15 days before the first general solicitation is made, and another closing Form D within 30 days of the termination of the offering. Requiring a Form D before the first general solicitation presents a number of logistical problems for companies. First, Form D requires information such as the type and number of securities being sold and the amount being offered, information which the company may not have settled upon at the commencement of the offering. In addition, making a general solicitation pegs a company into 506©, which at the moment isn’t a fatal flaw — all the company needs to do is take reasonable steps to verify that all its purchasers are accredited investors. However, if these proposed rules are adopted, if a company accidentally makes a general solicitation without having filed an Advance Form D, they may end up subject to a penalty of being banned from utilizing Rule 506 for one calendar year. As a result, if the proposed rule is adopted, many startups raising funds under Rule 506 may be counseled to simply file an Advance Form D even if they have no intention of making a general solicitation. However, this forecloses the use of Rule 506(b), which does permit a limited number of non-accredited investors — some companies may continue to utilize 506(b) to bring on non-accredited investors for a number of reasons, perhaps because those investors bring strategic advice or contacts. For those companies who wish or need to utilize Rule 506(b), the proposed Advance Form D requirement means they must risk accidentally tripping into Rule 506© and barring themselves from Rule 506 for a year. These risks have led many to submit comments in opposition to the SEC.