Reg A+
Reg A+
President Obama signed the Jumpstart Our Business Startups (JOBS) Act in 2012 after receiving overwhelming bipartisan support. The equity crowdfunding law helps startups and smaller businesses raise capital through innovative rules and regulatory rollback. The SEC began implementing the law in 2013, Reg A+ was finalized in 2015.
Reg A+ Basics
- Two-tiered crowdfunding mechanism that also serves as a public-offering onramp for smaller issuers
- Tier I: Issuers can raise up to $20 million from accredited and nonaccredited investors. Issuers have relatively small upfront accounting burdens during qualification but are subject to a state-level “coordinated review process”
- Tier II: Issuers can raise up to $75 million from accredited and nonacredited investors. Issuers face higher upfront accounting burdens but raises are preempted from state-level qualification (but not notice or fees)
- Issuers can “test the waters” to gauge interest without incurring substantial accounting or legal fees.
- Finanical instruments can be sold and underwitten by broker dealers
- Financial instruments are unrestricted (freely tradable) although issuers may choose to impose contractual transfer restrictions and state-level ambiguity exists
- Complex SEC qualification process
Is your company a good fit for Reg A+?
Disclaimer: This document is for informational purposes only. It does not represent a contract, offer, or any legal obligation on the part of JOSSEY PLLC. Many factors go into a successful raise including appeal of the product, market for the product, quality of marketing, operating history of the company, experience of management, and ability to self-generate crowd investors. Legal and regulatory compliance is only one part. Investing in small companies and startups carries lots of risk, there is no guarantee any issuer will have a successful raise.