Regulation A (aka – “Reg A” or “Reg A+”) is an exemption from registration under the Securities Act of 1933 for public securities offerings of up to $50 million annually. It is often referred to as a type of crowdfunding offering because of the ability of companies to broadly solicit interest from investors and to sell securities to retail, non-accredited investors.
Regulation A has two offering tiers:
- Tier 1, for offerings of up to $20 million in a 12-month period; and
- Tier 2, for offerings of up to $50 million in a 12-month period.
For offerings of up to $20 million, companies can elect to proceed under the requirements for either Tier.
Compared with Tier 1, Tier 2 offers both additional advantages and obligations. While companies in Tier 2 offerings can offer and sell over $20 million in securities and are not required to have their offering statement qualified and registered by state securities regulators, they are subject to audited financial and ongoing reporting requirements, as well as investor limitations.
Generally, however, companies are subject to the same basic eligibility and bad actor disqualification requirements, as well as substantively similar disclosure requirements.