Regulation A+ Offerings

Regulation A+ Offerings

Regulation A+ Offerings accomplish all of the same things as the S-1 Registration Statement and the timeline is comparable, however there are several key differences that are outlined below. On March 25, 2015, the SEC adopted new rules that update and expand Regulation A, an existing exemption from SEC registration for small companies seeking to raise money in the public markets. The new rules, which are referred to as "Regulation A+", create two tiers of securities offerings:

  • Tier 1, which consists of public offerings up to $20 million in a 12-month period, with no more than $6 million in offers by selling security-holders that are affiliates of the issuer; and
  • Tier 2, for public offerings up to $50 million in a 12-month period, with no more than $15 million in offers by selling security-holders that are affiliates of the issuer.

Most importantly for companies, the new rules provide for the preemption of state Blue Sky laws in Tier 2 offerings. Tier 1 offerings will be subject to federal and state registration and qualification requirements, but for state qualification issuers may take advantage of a coordinated review program developed by the North American Securities Administrators Association (NASAA).

In addition, Regulation A+ securities purchased by non-affiliates are free trading from day one. So, an ongoing secondary market can develop for investors, leading to lower capital costs for issuers.

Both Tiers are subject to certain basic requirements as to issuer eligibility, disclosure, and other matters. Tier 2 offerings are subject to additional disclosure and ongoing reporting requirements, including: a requirement to file audited financial statements in the offering document, annual audited financial statements, and semiannual and current event reports. The new rules also place a limitation on the amount of securities non-accredited investors can purchase in a Tier 2 offering of no more than 10% of the greater of the investor's annual income or net worth.

As to eligibility, the Regulation A+ exemption will be limited to companies based in the U.S. or Canada and to companies that are not currently SEC reporting. Blank-check companies, funds required to register under the Investment Company Act, companies that are seeking to offer and sell asset-backed securities or fractional undivided interests in oil, gas or other mineral rights, and those whose SEC registration has been revoked within the past five years or who are disqualified under the "bad actor" qualification rules are not eligible.

If you are interested in having us write a registration statement for your company please refer to our contact information and send us an email inquiry for all associated information and prices.

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