Jun 19, 2015

Reg A+ To Expand Capital Markets Access For Private Companies

Equity Crowdfunding, Financing By Lou Bevilacqua

Emerging companies were given a new tool today as amendments to Regulation A go into effect.   These new rules give entrepreneurs greater access to capital.

Tier 2 of amended Regulation A, nicknamed Reg. A+, will allow domestic and Canadian private companies to raise up to $50 million with no pre-offer filing requirements and, if desired, create a market in their stock with lighter ongoing reporting obligations.

Under Reg. A+, a company can “test the waters” for an offering before any marketing materials are filed with the SEC. Advertising, email, social media or any other direct or indirect solicitation may be used to solicit non-binding indications of interest in the transaction from both accredited and non-accredited investors (to a limit). If the company decides to go ahead with the offering, management files an  “offering statement” with the SEC and once comments are cleared sales can begin. State-specific securities law review is not required.

Securities sold this way become free trading. And if enough shareholders buy those securities, the company can partner with a market maker to receive a quote on either the Pink Sheets or the OTCQX.

The information above is only a brief summary of the amended regulation. We have prepared a detailed guide to Reg. A+ for entrepreneurs that includes a detailed description of eligibility criteria, ongoing reporting requirements, timeline, costs and other key considerations for issuers and investors. Click here to download your free copy.