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Regulation A+ Takes Effect

June 19, 2015

On June 19, 2015, Regulation A+ took effect. Regulation A+ is part of the rulemaking that encompasses the JOBS Act of 2012, which is designed to increase capital-raising opportunities for small businesses. Regulation A+ makes it easier for small businesses to raise capital by removing many of the regulatory compliance hurdles that had been in place previously. The new rules will allow companies to raise up to $50 million under Regulation A, which is a less-complicated route in terms of compliance and administration, as the previous limit was $5 million.  

  • Exempt companies using Regulation A from registration with state securities administrations.
     
  • Establish two tiers of fundraising under Regulation A:
    • Tier 1: up $20 million in a 12-month period, with not more than $6 million in offers by selling security-holders that are affiliates of the issuer
    • Tier 2: $20-$50 million - for offerings of securities of up to $50 million in a 12-month period, with not more than $15 million in offers by selling security-holders that are affiliates of the issue. Also subject to ongoing review.