On May 29, 2018, President Trump signed the Economic Growth, Regulatory Relief and Consumer Protection Act (the “Act”) into law. While much of the Act centers on regulatory relief for smaller financial institutions and community banks, Section 508 of the Act adopts a major change to Regulation A+. Prior to the Act, Regulation A+ was not available to an existing public company (i.e., a company reporting under Section 13 or 15(d) of the Securities Exchange Act of 1934). Section 508 of the Act directs the SEC to amend Regulation A+ to allow a public company to use Regulation A+ to offer its securities. However, Section 508 of the Act is not self-effecting, which means that, until the SEC adopts rules implementing Section 508, only non-public companies may use Regulation A+. In addition to allowing public companies to use Regulation A+, the Act also directs the SEC to amend its rules to say that a public company that conducts a Tier 2 offering will satisfy its Regulation A+’s periodic reporting obligations by complying with its existing reporting obligations under Section 13 or Section 15(d).
The U.S. legislature continues to work to improve access to capital for small issuers. One proposed amendment to Regulation A+ would allow Tier 2 issuers to offer up to $75 million of securities under Regulation A+, rather than the current $50 million limit. You can read more about this proposed change here.
In connection with this post, we are also releasing an updated version of our popular publication “FAQs About Regulation A+ Securities Offerings,” which has been updated to incorporate the provisions of the Act. Below is a sample of the questions that are answered in the publication:
- Which companies are eligible to use Regulation A+?
- What is the general process for a Regulation A+ offering?
- What are the differences between a Tier 1 and a Tier 2 offering?
- Are there any ongoing reporting requirements?
- Can the company also list its securities on the NYSE or NASDAQ trading?