Enter to open, tab to navigate, enter to select
Regulation A
Practical Law Glossary Item 4-548-0785 (Approx. 3 pages)
Glossary
Regulation A
Rules 251 through 263 under the Securities Act, which the SEC recently amended again effective March 31, 2021. Amended Regulation A, informally referred to as Regulation A+, provides an exemption from Securities Act registration for two tiers of offerings, including:
- Tier 1 offerings, offerings of up to $20 million in any 12-month period, including a maximum of $6 million in secondary sales by affiliates of the issuer. Offers and sales in Tier 1 offerings are subject to the blue sky registration and qualification requirements of all relevant states.
- Tier 2 offerings, offerings of up to $75 million in any 12-month period, including a maximum of $22.5 million in secondary sales by affiliates of the issuer. Both offers and sales in Tier 2 offerings are exempt from blue sky registration and qualification requirements of relevant states. Tier 2 issuers become subject to ongoing reporting obligations after completing their offering. Unless they are accredited investors or another exemption applies, Tier 2 offering investors are subject to investment limits.
In both offering tiers, secondary sales in an issuer's initial Regulation A offering and any other Regulation A offering in the following year are subject to a cap of 30% of the aggregate offering price of the particular offering.
Amended Regulation A is available to issuers organized and with their principal place of business in the US or Canada, except for:
- Investment companies and business development companies.
- Development stage companies that have no specific business plan or purpose or have indicated their business plan is to engage in a merger or acquisition with an unidentified company or companies (blank check companies).
- Issuers of fractional undivided interests in oil or gas rights, or similar interests in other mineral rights.
- Issuers that have not filed ongoing reports required by Regulation A during the two years immediately preceding the filing of a Regulation A offering statement.
- Issuers that are or have been subject to an SEC order under Section 12(j) of the Exchange Act entered within five years before the filing of a Regulation A offering statement denying, suspending or revoking their Exchange Act registration.
- Issuers that have not filed all the reports required to have been filed by Section 13 or 15(d) of the Exchange Act in the two-year period preceding the filing of an offering statement.
- Issuers disqualified by Regulation A's "bad actor" provisions, although issuers may apply for a waiver of disqualification (see SEC: Process for Requesting Waivers of "Bad Actor" Disqualification Under Rule 262 of Regulation A and Rules 505 and 506 of Regulation D).
Offerings under Regulation A are sometimes referred to as mini-public offerings because they share some key characteristics with SEC-registered offerings. To offer securities under amended Regulation A, an issuer must file an offering statement with the SEC, including an offering circular for distribution to investors and all required exhibits. Offering statement filings are subject to SEC review. Amended Regulation A offerings are considered public offerings and can be made using general solicitation and advertising.
Securities sold in amended Regulation A offerings are not restricted securities.
For more information on amended Regulation A and the original Regulation A, see Regulation "A+" Offerings Under Amended Regulation A.