F E AT U R E D A RT I C L E
Is a Public Company Eligible to Do a Reg A+ Offering?
S
o-called Regulation A+ has generated a lot of interest, and well over 100 companies have filed with the SEC to raise capital via Reg A+. In my previous article in MicroCap Review, I stated that Reg A+ is an excellent way for a company to raise up to $50,000,000, especially if it sells its products to individual consumers. The SEC’s commentary to the Regulation A amendments states that their mandate is to review these amendments after two years. The rule changes were promulgated on March 25, 2015—the two year period is approaching an end, so it’s a good time to review and reflect on certain of the Regulation A amendments that were made, and some that I believe should have been made. A question often asked about Reg A+ eligibility is, “Is a company that is already public eligible to raise capital through a Regulation A+ offering?” And the answer, which is a common reply to many questions about SEC laws and regulations, is “Yes, and no.”
n BY JOHN LOWY, Esq.
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MicroCap Review Magazine
Yes, privately-owned companies and nonreporting public companies (which usually trade on OTC Markets’ “Pink Sheets” as non-reporting issuers), are eligible to raise up to $50,000,000 in a Tier 2 Regulation A+ offering, if they have audited financial statements). Or, these non-reporting but publicly traded companies can raise up to $20,000,000 in a tier 1 Reg A+ offering, without having audited financials. However, although US and Canadian companies have always been eligible to use Regulation A+, since the inception of Reg A, most SEC-reporting issuers, explained below, have been ineligible to use Regulation A. Why? Probably because when the Regulation was announced, it was thought that a $300,000 maximum would differentiate it from registered public offerings using Form S-1, which had—and still has—no ceiling. Probably the most artificial eligibil-
The SEC’s commentary to the Regulation A amendments states that their mandate is to review these amendments after two years. www.stocknewsnow.com