Understanding Rule 701

Rule 701 is a securities law exemption that lets private companies issue equity awards to employees, contractors, platform workers and advisors without registering them with the SEC. The exemption allows up to $10 million in aggregate sales price within a consecutive 12-month period, a limit raised from $5 million as of July 24, 2018. The article notes that Rule 701 cannot be combined with other exemptions, such as Regulation D, and that companies exceeding the $10 million limit must provide disclosures including a plan summary, risk factors and financial statements no more than 180 days old.