The Securities and Exchange Commission recently issued new compliance and disclosure information with respect to Regulation A+ equity crowdfunding, which include amendments to increase the amount of money companies can raise through crowdfunding among many others. The four main points regarding Regulation A+ are very technical and include the following:
1) Item 182.16: The SEC will not object to an issuer filing a Form 1-Z to suspend its Tier 2 reporting obligation where the Tier 2 offering is validly withdrawn pursuant to Rule 259 prior to making any sales and such withdrawal occurs before the issuer has filed an annual report pursuant to Regulation A or the Exchange Act for the fiscal year in which its offering statement was qualified.
2) Item 182.17: While pursuant to paragraph (c)(1)(i) of Part F/S of Form 1-A (Regulation A offering statement), the SEC says Tier 2 offerings may follow paragraphs (b)(3)-(4) of Part F/S for the age of interim financial statements, an issuer in a Tier 2 offering may also follow those paragraphs for full fiscal years.
3) Item 182.18: When asked if an issuer qualifying an offering statement pursuant to Regulation A is required to file a tax opinion as an exhibit to its Form 1-A, the SEC stated it is not required, but the issuer may elect to do so as an additional exhibit regardless.
4) Item 182.19: The SEC will not object to an issuer with ongoing Regulation A reporting obligation which does not include an auditor’s consent to the use of an audit report for the financial statements included in a Form 1-K as an exhibit to the Form 1-K
If you’re like most issuers, you probably don’t even understand what all this jargon really means. But to lawyers specializing in Regulation A+ offerings, understanding the above could mean the difference between a qualified SEC Regulation A+ offering ready to start taking investments, or a stalled Reg.A+ deal that’s going no where. The takeaway from all this is that expert legal representation is essential for a successful Regulation A+ offering. Industry professionals specializing in the Reg.A+ marketplace know the best lawyers and auditors to help you along the way.