Rule 506(c) Accredited Investor Verification Package

Rule 506(c) Accredited Investor Verification Package

For Informational Purposes Only

A four-part template for verifying that every investor in a Rule 506(c) offering meets accredited-investor status — the regulatory requirement that distinguishes a 506(c) raise from its 506(b) counterpart.

Download Template (.docx)

What This Document Does

Rule 506(c) permits general solicitation — public announcements, social media posts, and open pitching — but only if every purchaser is a verified accredited investor. Unlike 506(b), where a checkbox and a questionnaire are often enough, 506(c) requires the issuer to take “reasonable steps to verify” each investor’s status. This package provides the operational framework for that verification.

The template is divided into four parts. Part A collects investor information and the investor’s initial certification. Part B provides four verification modules — third-party professional confirmation, income-based verification, net-worth-based verification, and entity/trust verification — so each investor can follow the path that matches their situation. Part C is an internal determination form that the issuer’s reviewer completes and files confidentially. Part D covers privacy protections and record-retention practices.

Why Startups Need This

The ability to advertise a fundraise publicly is powerful — it opens a startup’s raise beyond the founder’s existing network. But that power comes with a compliance obligation that many founders underestimate. An investor’s self-certification alone is not enough for 506(c). The SEC has made clear that issuers need a documented, reasonable process, and the consequences of getting it wrong include losing the exemption entirely, which can unwind an offering retroactively.

This package gives founders a structured, defensible process. Rather than improvising verification for each investor, the template standardizes the approach while remaining flexible enough to accommodate different investor types — from a high-income individual who can provide tax records, to a family office that needs entity-level verification, to an investor whose CPA or broker-dealer is willing to write a confirmation letter.

Key Provisions Explained

Part A — Investor Instructions and Certification

The investor reads what is being asked and why, selects the verification method they plan to use, and signs an initial certification that the information they provide will be complete and accurate. This section also establishes the secure submission channel — verification documents should never travel over unencrypted email.

Module 1 — Third-Party Professional Confirmation

A registered broker-dealer, SEC-registered investment adviser, licensed attorney, or CPA provides a letter confirming they took reasonable steps to verify the investor’s accredited status. This is often the simplest path for investors who already have professional advisors. The letter template specifies what the confirmation must include without requiring the advisor to disclose underlying financial details.

Module 2 — Income Verification

For investors qualifying on income, the template collects tax records or written confirmation from a tax professional covering the required lookback period, plus a forward-looking representation about the current year. If the investor qualifies on joint income, the spouse or spousal equivalent must co-sign. The reviewer records document types and date ranges without copying raw financial figures into the file.

Module 3 — Net Worth Verification

Covers asset evidence (bank and brokerage statements, appraisals, tax assessments) and liability evidence (consumer credit report or equivalent). The template incorporates the primary-residence exclusion and related debt rules, and requires a signed representation that all material liabilities have been disclosed — a step many ad hoc processes skip.

Module 4 — Entity, Trust, or Other Category

Handles the full range of non-individual investors: entities with total assets above the threshold, regulated institutions, ERISA plans, family offices, knowledgeable employees, and entities where every equity owner is individually accredited. For the all-owners category, each owner must independently verify through one of the other modules — a requirement that catches many issuers off guard.

Part C — Internal Issuer Determination

This is the issuer’s internal record — not shared with the investor. The reviewer logs which module was used, what evidence was reviewed, whether any discrepancies arose and how they were resolved, and records a final determination (verified, not verified, or more information required) with a reasoning summary. This creates the paper trail that regulators will want to see.

Part D — Privacy and Record Handling

Verification requires collecting sensitive financial information, which creates its own obligations. This section establishes who has access to the records, how they are stored and transmitted, how long they are retained, and what happens if a security incident occurs. The goal is to preserve the determination trail while minimizing unnecessary copies of underlying sensitive documents.

Emerging Provisions (2025–2026)

Flexible Verification Standard

The SEC’s current guidance emphasizes a principles-based, facts-and-circumstances approach rather than rigid safe harbors. This template follows that philosophy — it does not hard-code specific document requirements or income thresholds, instead referring to “records permitted by current law” and “the applicable threshold.” This future-proofs the template against regulatory updates to the accredited-investor definition or verification methods.

Expanded Accredited Categories

Recent amendments to Rule 501(a) added categories including knowledgeable employees of private funds, family offices with at least $5 million in assets, and holders of certain professional certifications. Module 4 is designed to accommodate these categories alongside traditional entity-level qualification, so the template does not need restructuring as the SEC expands the definition.

Privacy-First Documentation

The verification process requires handling tax returns, account statements, credit reports, and identity documents. Best practice is shifting toward recording the determination trail — who reviewed, what categories of evidence, what conclusion — without retaining full copies of underlying documents longer than necessary. Part D of this template reflects that approach, with separate storage for any documents counsel determines must be retained.

Material-Change Check

For offerings with rolling closings, significant time can pass between verification and the actual sale. The template includes a material-change check step in the verification checklist, requiring the reviewer to confirm that the investor’s status has not materially changed before each closing — a step the SEC has signaled it views as part of what “reasonable” verification entails.

How to Use This Template

Download the template and customize the bracketed placeholders for your company, securities, and offering details. Establish a secure submission channel before distributing Part A to investors — this could be an encrypted portal, a secure file-sharing service, or counsel’s secure system. Each investor completes Part A (certification and method selection) and the applicable module in Part B, then submits their documentation through the secure channel.

Your verification reviewer — typically inside counsel, outside securities counsel, or a designated compliance officer — then completes Part C for each investor. The determination should be finalized before the sale closes. File the completed package in accordance with Part D’s privacy and retention requirements. The verification checklist at the end of the template provides a step-by-step confirmation that each element has been addressed.

This template pairs directly with Montague Law’s Subscription Agreement (Regulation D), which handles the actual investment documentation. Use the verification package to confirm investor status, then proceed to the subscription agreement for the capital commitment.

This template is provided by Montague Law for informational and educational purposes. It does not constitute legal advice and does not create an attorney-client relationship. Securities offerings involve complex federal and state regulatory requirements. Consult qualified legal counsel before using this template in any offering. Montague Law is a Florida-based law firm focused on corporate, M&A, venture capital, and technology transactions.