SEC Regulation A+ Offerings – Comprehensive Overview
On March 25, 2015, the Securities and Exchange Commission (SEC) approved amendments that expand exempt public offerings under Regulation A in accordance with requirements of the Jumpstart Our Business Startups (JOBS) Act. The goal was to allow companies to conduct public offerings more quickly and at lower cost than more traditional public offerings. The final rule is fairly consistent with the December 2013 proposal, despite heavy lobbying by state securities regulators. The final rules will be effective 60 days after publication in the Federal Register.
Issuances under existing Regulation A exemptions were infrequent due to the $5 million capital limit from accredited investors only. The SEC chairman noted, “Our goal is to make Regulation A+ an effective, workable path to raising capital that also provides strong investor protections.” The amendments raise the issuance limit and streamline the involvement of state securities regulators. The changes also permit nonaccredited investors but limit their total risk.
The final rule builds on current Regulation A—creating what is referred to as “Regulation A+”—and preserves, with some modifications, existing provisions regarding issuer eligibility, offering circular contents, testing the waters and “bad actor” disqualification.