SEC Proposes Amendments to Reg. A to Increase Access to Capital for Smaller Companies
The SEC has proposed rules intended to increase access to capital for smaller companies pursuant to the JOBS Act. The proposed rules would update the Regulation A "Conditional Small Issues Exemption," which currently provides an exemption from registration for small offerings of securities up to $5 million within a 12-month period.
The updated exemption would expand Reg. A by creating two tiers of Reg. A offerings: Tier 1, which would consist of those offerings already covered by Reg. A - namely, securities offerings of up to $5 million in a 12-month period, including up to $1.5 million for the account of selling security-holders - and Tier 2, which would consist of securities offerings of up to $50 million in a 12-month period, including up to $15 million for the account of selling security-holders.
State securities law requirements would be preempted for Tier 2 offerings. The proposal also explores alternative approaches to address state securities law requirements, including a coordinated review program proposed by the NASAA.
SEC Chair Mary Jo White stated that, "at its core, the mandate of Regulation A is to help increase access of small companies to capital." She went on to note that the update proposal is meant to make the rule more effective by creating a workable path to raising capital that also builds necessary investor protections. White reported that Reg. A is not frequently used by issuers. She also stated that the proposed rules broadly preserve and modernize the essential, current framework of Reg. A, including existing provisions regarding issuer eligibility, offering circulars, "testing the waters," and bad actor disqualifications. The proposal also retains the review and qualification of offering statements by the Commission and its staff, a process which she believes is critically important for investor protection.
See: SEC Rule Proposal; SEC Press Release and Fact Sheet; SEC Chair White's Statement; Commissioner Stein's Statement; Commissioner Aguilar's Statement; Commissioner Piwowar's Statement. See also: NASAA Statement on SEC's Regulation A+ Proposed Rule.See also: Current Version of Regulation A (subscribers only). Click here to submit comments to the SEC.