Emerging Markets Law

SEC Permits Reporting Companies to Use Regulation A

Posted In SEC, Securities

Securities and Exchange Commission Building

In December of 2018, the SEC adopted rules to allow SEC reporting companies to use Regulation A to raise up to $50 Million in a 12-month period.

The new rules took effect January 31, 2019, and permit eligible companies to file a Form 1-A to begin an unregistered offering.

Before the rule change, Regulation A was not available to companies that were subject to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Tier II Regulation A offerings are exempt from Blue Sky registration and are freely tradeable, making them an attractive alternative to a traditional IPO.

The new rules offer companies more flexibility and will allow them to benefit from ‘testing the waters,’ general solicitation, and reduced underwriting fees.  The new rules should make it easier for SEC reporting companies to undertake follow-on offerings for amounts less than $50 million.

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