The JOBS Act was enacted in 2012 largely to encourage capital raising by smaller companies. Title IV of the JOBS Act, instructs the SEC to amend or adopt a new Regulation A under the Securities Act of 1933 so that offerings of up to $50 million are exempt from registration with the SEC, up from the current maximum in Regulation A of $5 million.
The SEC issued proposed rules and forms on December 18, 2013 that would implement this directive by amending Regulation A to create two tiers of Reg A offerings:
· Tier 1: Up to $5 million in any 12-month period, including a maximum of $1.5 million in secondary sales, that are not exempt from “blue sky laws” or the securities law of US states.
· Tier 2: Up to $50 million in any 12-month period, including a maximum of $15 million in secondary sales, would be exempt from “blue sky laws” or the securities law of US states (so-called Regulation A+).
Despite additional disclosure requirements, including audited financial statements, and other obligations, most issuers would clearly prefer to explore the Regulation A+ route over the traditional Reg A exemption, given the higher maximum amount that can be raised under Regulation A+ and the exemption from blue sky laws. However, the SEC has been unable to pass final rules on Regulation A+, due in large part to the sensitivity around exempting public sales of securities from state law regulation.
Read the whole article on Crowd Valley Blog.