Can An LLC Invest Into A Regulation D Rule 506b Or 506c Syndication Offering?

Tilden Moschetti, a securities attorney at Moschetti Syndication Law Group, discusses the complexities of allowing an LLC to invest in a syndication. According to Moschetti, this is a common query from clients, and the answer largely depends on whether the investment comes under Rule 506b or 506c offerings.

For Rule 506c, an LLC can invest if its assets exceed $5 million, or if each member is an accredited investor. This requires independent verification under Regulation D Rule 501, which mandates that all members must be accredited investors in a Rule 506c offering.

However, for Rule 506b, the situation is different. If an LLC wants to invest and has both accredited and non-accredited members, it's possible, but non-accredited members will count individually towards a limit of 35 non-accredited investors in any 90-day period. Further, a substantive relationship must be established with the LLC, meaning the syndicator should ideally meet all LLC members to ensure compliance with the prohibition on general solicitation under Rule 506b.

In conclusion, LLCs can invest in Rule 506b and 506c offerings, provided they meet certain criteria. For Rule 506c, either the LLC needs assets greater than $5 million, or every member must be an accredited investor. In the case of Rule 506b, all individual members are counted, and a relationship needs to be established to ensure no general solicitation occurs. The Moschetti Law Group specializes in creating these offerings and takes care of all the necessary documentation and filings. Their goal is to help clients succeed and to build long-term relationships.

Read more about Reg D Structure - How should you structure your Reg D syndication offering?: https://www.moschettilaw.com/reg-d-syndication-structure/

Read more about Real Estate Fund Structures - Real Estate Syndication Fund Structures: https://www.moschettilaw.com/real-estate-syndication-fund-structures/

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Moschetti Syndication Law Group is a boutique syndication law firm, serving small and growth-bound syndicators, and well as private equity firms. We keep our firm ‘boutique’ size so we can tailor the services to each client’s unique needs without turning the firm into a faceless factory or passing unnecessary overhead expenses onto our clients. (As our client, you’ll only pay a fixed fee, so no surprises.) As for the client experience, we give real-time answers without making you book an official appointment. And we’ll work with your ambitions and overall vision to help you close the current deal and fill-in that ‘missing’ piece - whatever you need - to keep adding more syndications to your portfolio. We keep syndicators syndicating (TM).

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