SEC Amends Rules to Permit Existing Reporting Companies to Offer Securities Pursuant to Regulation A
In his Real Estate Securities column, Peter M. Fass writes: The SEC has issued final rule amendments permitting companies reporting under Section 13 or 15(d) of the 1934 Act to offer securities pursuant to the registration exemption Regulation A. The Amendments also provide that, so long as the reporting company is current in its 1934 Act periodic reports, the reporting company has no additional periodic reporting obligations under Regulation A.
February 15, 2019 at 02:45 PM
7 minute read
Section 508 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (Public Law No. 115-174 (May 24, 2018)) expanded the availability of Regulation A (17 C.F.R. §230.251 et. seq.) by requiring the SEC to remove the requirement that the company issuing securities not be subject to the Securities and Exchange Act of 1934 (the 1934 Act) reporting requirements immediately before such offering. In addition, it required the SEC to amend Regulation A so that any company that is subject to Section 13 or 15(d) of 1934 Act is deemed to have met the periodic and current reporting requirements of Regulation A if it satisfies the Section 13 reporting requirements.
The SEC has issued final rule amendments (Amendments) permitting companies reporting under Section 13 or 15(d) of the 1934 Act to offer securities pursuant to the registration exemption Regulation A. See Securities Act Release 33-10591 (Dec. 19, 2018). Previously, offerings pursuant to Regulation A were expressly limited to non-reporting companies. The Amendments also provide that, so long as the reporting company is current in its 1934 Act periodic reports, the reporting company has no additional periodic reporting obligations under Regulation A. The Amendments became effective on Jan. 31, 2019. Regulation A+ is the informal name given to the amended SEC rules that expanded the Regulation A offering exemption.
Who benefits. The Amendments provide existing SEC reporting companies with another option for capital raising when the amount sought is less than $50 million, particularly those with non-exchange-listed securities and those not S-3 eligible for primary offerings. Regulation A+ is an alternative to a small registered IPO and as either an alternative or a complement to other securities offering methods that are exempt from registration under the Securities Act of 1933 (1933 Act) such as Regulation D private placement.
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