What is a substantive or established relationship with an investor (506b funds)?

Updated 1 week ago by Sanjay Vora

The issuer seeking a Rule 506(b) exemption is required to maintain a record-keeping system (or written policy and procedure) that details the relationship. This documentation should cover held meetings, attendees, discussed topics, and demonstrate a substantial passage of time between the initial meeting and the investment offer. While there isn't a specific duration outlined, casually meeting someone at an event and promptly asking them to invest likely doesn't meet the criteria. The SEC has emphasized that the "quality of the relationship" holds greater significance than the duration, although this assessment remains subjective.

Avestor has a template that we can provide you with the right questions to collect to show that you have a substantive relationship with an investor.

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