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Reg. A+ Expansion Passes the House
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Reg. A+ Expansion Passes the House

10.03.17

On September 5, 2017, the bipartisan “Improving Access to Capital Act” (H.R. 2864) was overwhelmingly passed by the United States House of Representatives and was subsequently referred to the Senate Committee on Banking, Housing and Urban Affairs.  The bill would allow public companies that are subject to the SEC’s reporting requirements to utilize the exemption from registration set forth in Tier 2 of Regulation A.  H.R. 2864 was introduced in the House last June, and its legislative history and text can be read

As mandated by the JOBS Act, the SEC adopted rules in 2015 that update and expand Regulation A to allow non-public companies to conduct a “mini-IPO” to raise up to $50 million in a 12-month period, rather than registering securities under the Securities Act of 1933, potentially saving these companies significant sums of money when going public.  These rules are commonly referred to as “Regulation A+.”

If H.R. 2864 also passes the Senate, all public companies would be eligible to raise money under Regulation A+, providing smaller public companies that are not eligible to register securities on Form S-3 a cheaper and faster way to raise capital due to the expedited SEC review process under Regulation A+ and, in Regulation A+ Tier 2 offerings, the exemption from state blue sky review. The potential expansion of Regulation A+ to include public companies might also increase the number of seasoned Regulation A+ issuers, broaden institutional investors’ interest in Regulation A+ offerings, and ultimately increase liquidity and trading volume for such companies’ securities in the capital markets.



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