In December 2013, the Securities and Exchange Commission (SEC) proposed amendments1 to the public offering rules to exempt an additional category of small capital raising efforts as mandated by the Jumpstart Our Business Startups Act (the JOBS Act). The SEC has proposed to amend Regulation A to exempt offerings of up to $50 million within a 12-month period, and in so doing has created two tiers of offerings under Regulation A—Tier 1, for offerings of up to $5 million in any 12-month period, and Tier 2, for offerings of up to $50 million in any 12-month period. Rules regarding eligibility, disclosure and other matters would apply equally to Tier 1 and Tier 2 offerings.
In many areas, the rules modernize the existing provisions of Regulation A. Tier 2 offerings would, however, be subject to significant additional requirements, such as the provision of audited financial statements, ongoing reporting obligations and certain limitations on sales. This article will review proposed revisions (proposed rules).
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