Regulation A+ Offerings

On March 25, 2015, the SEC released final rules amending Regulation A. The new rules are commonly referred to as Regulation A+. The existing Tier I Regulation A, which does not preempt state law, has been increased to $20 million in any 12-month period, of which not more than $6 million can be resale by affiliate selling shareholders; and the new Tier II, which does preempt state law, allows a raise of up to $50 million. Issuers may elect to proceed under either Tier I or Tier II for offerings up to $20 million in any 12-month period, of which not more than $15 million can be resale by affiliate selling shareholders. Tier II offerings require additional disclosures and ongoing reporting requirements.

Tier II offerings will preempt state blue sky laws for securities offered or sold to “qualified purchasers” while Tier 1 offerings will be subject to full state registration and qualification requirements.

Both Tier I and Tier II offerings have minimum basic requirements, including issuer eligibility provisions and disclosure requirements. In addition to the affiliate resale restrictions, resales of securities by selling security holders are limited to no more than 30% of a total particular offering for all Regulation A+ offerings. Both tiers will allow companies to submit draft offering statements for non-public SEC staff review before a public filing, permit continued use of solicitation materials after the filing of the offering statement and use the EDGAR system for filings.