If you are a company looking to raise more public funding, you may be interested in learning more about Reg A and how it can help your company raise the capital you need. Learn more about Regulation A (and Regulation A+) below.
Reg A: What Is It?
Regulation A, which the Securities and Exchange Commission (SEC) modified in 2015 to become Regulation A+, is a type of exemption from having to list public offering of securities. The SEC made the change from A to A+ in order to make it easier for smaller companies to take advantage of this exemption so that they can more easily raise capital. It also led to two classifications of Regulation A, with Tier 1 being able to offer a $20 million maximum within 12 months, while Tier 2 would allow up to a $75 million maximum within 12 months.
Reg A: Benefits and Risks
The benefits of Regulation A are that smaller companies can more easily raise needed capital. Those in Tier 1 only have to report the final status of their offering, so the financial statements can be streamlined without the need for audits. Three format options are available to arrange the offering circular, plus there is no need to file Exchange Act reports unless the company have over 500 shareholders and $10 million or more in assets. Which tier a company can apply for depends upon the size of the company. Companies can offer either equity, debt, or a combination of both to raise the funding needed under Regulation A.
One risk associated with Regulation A is that there is a requirement for stringent documentation. Tier 1 securities have to be qualified by state regulators, whereas Tier 2 only has to be qualified by the SEC itself.
EquityTrack provides Reg A and other industry-leading capital raising services for both private and public companies. See how we can help your business raise needed capital at https://www.equitytrack.co/.
