Pursuant to a JOBS Act1 mandate, the Securities and Exchange Commission (SEC) adopted amendments to Regulation A,2 exempting offerings of up to $50 million and eliminating some of the impediments to use of the exemption. The Final Rules are effective June 19, 2015, 60 days after being published in the Federal Register.3 Popularly referred to as “Regulation A+,” amended Regulation A offers issuers and selling shareholders two options for relying on the exemption from registration—Tier 1 for offerings that do not exceed $20 million in a 12-month period and Tier 2 for offerings that do not exceed $50 million in a 12-month period. Previously, Regulation A was available only to offerings that did not exceed $5 million in a 12-month period, and offerings remained subject to state “blue sky” registration requirements.

The new two-tier offering regime carries over some characteristics of existing Regulation A, such as the required filing of an offering statement and the ability to “test-the-waters.” It adds new benefits, such as exemption from state “blue sky” registration requirements for Tier 2 offerings, and relaxes Securities Exchange Act of 1934 (1934 Act) registration requirements; but it also adds new requirements, such as, for Tier 2 issuers, a uniform requirement to include audited financial statements and to file on-going periodic reports with the SEC.

The Final Rules

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