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Reg A+: Who’s Eligible or Excluded?

private-investment-fund[1]Who’s excluded from participating in regulation A+ funding? The following provides a bit more detail and clarity on the eligibility and offering requirements for companies seeking to perform a Regulation A+ offering with companies operating and organized in Canada and the United States.

  • Regulation A+ is not available to companies already subject to the reporting requirements of under the Exchange Act. In other words, public companies need not apply.
  • Investment companies as defined under the Investment Company Act of 1940 are excluded from participating. This includes certain Business Development Companies.
  • Companies seeking to offer or sell asset-backed securities, undivided or fractional interests in oil, gas or other mineral rights are precluded from participation.
  • Blank check companies or firms with no business purpose or specific plan are precluded from participating. This also includes companies looking to engage in a merger or acquisition with an unidentified target.
  • Shell companies can participate, but the shell must not be a blank check company with no business or nominal business or no assets or nominal assets.
  • Issuers subject to reporting requirements under the Exchange Act but do not file required ongoing reports with the SEC. A previous Tier 2 issuer could fall under this preemption from participation.
  • Issuers subject to any order by the SEC under Section 12(j) of the Exchange Act. Specifically instances of denying, suspending or revoking registration anytime in the last five years.
  • Any issuer is disqualified under Rule 262 of Regulation A+ which includes disqualified persons—often referred to as “bad actors”

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