Regulation A+ modernizes the offering process and provides an important capital-raising alternative for private companies by exempting certain small capital-raising efforts from Securities Act registration requirements. It establishes two tiers - Tier 1 allows offerings up to $20 million and Tier 2 allows up to $50 million. Tier 2 offerings have additional ongoing filing obligations but are exempt from state securities law registration. Regulation A+ eases the burden for small public offerings and provides a meaningful option for smaller companies to raise capital other than through private offerings or IPOs.

1. SecuritiesandCapitalMarketsInsight:RegulationA-Plus
Recent SEC amendments to Regulation A of the Securities Act of 1933 exempt certain small capital-raising efforts from
the Securities Act registration requirements. The new rules, commonly referred to as Regulation A+, were mandated by
the Jumpstart Our Business Startups (JOBS) Act and are intended to make capital more accessible to small businesses.
To this end, Regulation A+ modernizes the offering process and provides an important capital-raising alternative for
private companies.
Who will benefit from Regulation A+?
Regulation A+ eases the burden of Securities Act registration for small public offerings and provides a meaningful
option for smaller and emerging nonpublic companies to raise capital other than through a Regulation D private
offering or undertaking a generally more costly IPO. Any issuer looking to raise no more than $50 million in a registered
offering should seriously consider utilizing Regulation A+.
Key Provisions of Regulation A+
The rule amendments increase the amount of capital that can be raised in a Regulation A offering from $5 million
to $50 million over a 12-month period by Eligible Issuers. The rules establish two tiers: Tier 1, for offerings that raise
up to $20 million in proceeds in a 12-month period (including up to $6 million of securities sold on behalf of selling
security-holders), and Tier 2, for offerings that raise up to $50 million in proceeds (including up to $15 million of
securities sold on behalf of selling security-holders). The $50 million limit is subject to periodic review by the SEC.
Key provisions of Regulation A+ are highlighted below:
Lexis Practice Advisor®
Tier 1 Tier 2
Eligible Securities Equity, debt, debt convertible into equity
and any guarantees of the same.
Same as Tier 1.
Ineligible Securities Asset-backed securities Same as Tier 1.
Initial Offering Limits Up to $20 million in a 12-month period, including up to $6
million for the account of selling security-holders that are
affiliated with the issuer.
Up to $50 million in a 12-month period,
including up to $15 million for the account
of selling security-holders that are
affiliated with the issuer.
Secondary Sales Limits Sales by all selling security-holders in an issuer’s first
Regulation A offering and within the following 12 months
are limited to no more than 30% of the aggregate offering
price (offering size) of the particular offering.
After expiration of the first twelve months, sales by
affiliates are limited to $6 million in any 12-month period
with no limit for non-affiliates, subject to offering cap.
Same as Tier 1.
After expiration of the first twelve
months, sales by affiliates are limited to
$15 million in any 12-month period with
no limit for non-affiliates, subject to
offering cap.
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Tier 1 Tier 2
Investment Limitation None Non-accredited investors may not invest
more than 10% of the greater of the
investor’s net worth or annual income
(for natural persons) or net assets or
annual revenue (for other persons),
unless the securities will be listed on a
national exchange.
Solicitation of Interest Issuers may “test the waters” to determine interest
in the proposed offering at any time before the Offering
Statement is qualified.
Same as Tier 1.
Initial SEC Filing and Review Form 1-A must be filed on EDGAR®
. Same as Tier 1.
Ongoing Filing Obligations None other than exit report after completion or
termination of the offering.
Subsequent filing obligations include
annual and semi-annual reports, current
event reports, special financial reports and
exit reports. However, if there are less than
300 record-holders (1,200 for a bank or
bank-holding company), the obligations
can be suspended after complete
reporting for a fiscal year in which the
offering statement was qualified.
Applicability of State Blue Sky Laws Offerings must comply with state securities laws. Offerings are exempt from state securities
law registration and qualification.
Key provisions of Regulation A+ continued—