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Regulation “A” 2015 Funding Is Nothing Short of a “Game Changer”

The Securities and Exchange Commission recently approved new rules for mini public stock offerings, a move supporters hope will make it easier for small and mid-sized companies to raise capital by cutting red tape. The rules apply to what are known as Regulation A offerings, creating what a Forbes commentator called “a new kind of ‘IPO lite’ that could be hugely beneficial for companies and investors alike.”

greenlight_person[1]The recently adopted rule by the SEC is nothing short of a game-changer. Regulation A currently limits deals to $5 million and requires issuers to register the offering and pay fees in every state in which they are selling under the so-called blue sky laws. That, critics say, has resulted in very few Reg A deals, with companies deciding it’s not worth going through all the bureaucratic hoops.

The new rules raise the funding cap to $50 million and preempt state oversight of deals between $20 million and $50 million, while subjecting them to stricter federal disclosure requirements. For issuers of deals between $5 million and $20 million, the rules will be the same as under the current Reg A. The final rules, often referred to as Regulation A+, would implement Title IV of the JOBS Act and provide for two tiers of offerings:

  • Tier 1, consisting of securities offerings of up to $20 million in a 12-month period, with not more than $6 million in offers by selling security-holders that are affiliates of the issuer.
  • Tier 2, consisting of securities offerings of up to $50 million in a 12-month period, with not more than $15 million in offers by selling security-holders that are affiliates of the issuer.

These new rules provide an effective, workable path to raising capital that also provides strong investor protections. Reg A+ is about creating jobs and new opportunities. And it’s about giving regular folks access to investments that only a handful of VC and private equity bigwig investors have enjoyed up until now.

With the new Regulation A+, the SEC is creating an intermediate capital formation step on the road to going public. It’s a new kind of ‘IPO-Lite’ that could be hugely beneficial for companies and investors alike.

At its core, the mandate of Regulation A+ is to help increase the access of smaller companies to capital. This is obviously a very important objective. The goal is to make Regulation A+ an effective, workable path to raising capital that very importantly also builds in the necessary investor protections.”

With Regulation A+, Congress, by allowing general solicitation and advertising in the capital formation process, opens broad possibilities for entrepreneurs and new and seamless investment opportunities for the public.

Ready to get started with your IPOtogo™? Request a no-obligation confidential consultation today or submit your deal at RegAMoney.com
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