Regulation A+ Post-Effective Filing Obligations
Upon qualification by the Securities and Exchange Commission (SEC) of a Tier 2 offering under Regulation A+, the issuer will immediately become a semi-public company, subject to an ongoing reporting regime.
Tier 2 issuers must file certain periodic and current reports analogous to those required to be filed by most publicly traded companies in the United States under the the “Exchange Act. However, the Regulation A+ periodic reports are required semi-annually as opposed to quarterly, and the disclosure requirements of the Regulation A+ periodic and current reports are generally reduced as compared to certain Exchange Act filings. Tier 2 issuers must timely file the following interim reports (as further discussed in the corresponding sections below):
A. Annual Reports on Form 1-K
B. Semi-Annual Reports on Form 1-SA
C. Current Reports on Form 1-U
D. Exit Reports on Form 1-Z
Annual Reports on Form 1-K
Annual Reports on Form 1-K require disclosure and discussion of information regarding business operations, related party transactions, beneficial ownership of voting securities, identification of directors, executive officers and significant employees, compensation data, management discussion and analysis (MD&A), and two years of audited financial statements. Annual Reports on Form 1-K also must include updated information about Regulation A+ offerings conducted in the year covered.
Annual Reports on Form 1-K must be filed within 120 days after the issuer’s fiscal year end.
Semi-Annual reports on Form 1-SA
Semi-Annual Reports on Form 1-SA require disclosure and discussion of financial statements covering the applicable six month periods, including MD&A. However, the financial statements included in a Semi-Annual Report on Form 1-SA may be unaudited and do not require auditor review. The Semi-Annual Report on Form 1-SA is similar to a Quarterly Report on Form 10-Q filed pursuant to the Exchange Act, although the Form 1-SA generally requires substantively less disclosures.
The Semi-Annual Report on Form 1-SA must be filed within 90 days after the end of the first six months of the issuer’s fiscal year end, commencing immediately following the most recent fiscal year for which full financial statements were included in the offering circular or, if the offering circular included six-month interim financial statements for the most recent full fiscal year, then for the first six months of the following fiscal year.
Current reports on Form 1-U
Issuers must disclose on Current Reports on Form 1-U:
1. Fundamental Changes. Entering/terminating a material definitive agreement that has resulted in, or would reasonably be expected to result in, a fundamental change to the nature of the issuer’s business or plan of operations.
2. Bankruptcy or Receivership. If a receiver, fiscal agent or similar officer has been appointed for the issuer or its parent, in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state, federal, or Canadian laws, in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the issuer or its parent, or if such jurisdiction has been assumed by leaving the existing directors and officers in possession but subject to the supervision and orders of a court or governmental authority.
3. Material Modification to Rights of Securityholders. If the constituent instruments defining the rights of the holders of any class of securities of the issuer that were issued pursuant to Regulation A have been materially modified or the rights or benefits evidenced by any class of securities issued pursuant to Regulation A have been materially limited or qualified by the issuance or modification of any other class of securities by the issuer.
4. Changes in Issuer’s Certifying Accountant. If an independent accountant who was previously engaged as the principal accountant to audit the issuer’s financial statements, or an independent accountant upon whom the principal accountant expressed reliance in its report regarding a significant subsidiary, resigns (or indicates that it declines to stand for re-appointment after completion of the current audit) or is dismissed or a new independent accountant has been engaged as either the principal accountant to audit the issuer’s financial statements or as an independent accountant on whom the principal accountant is expected to express reliance in its report regarding a significant subsidiary.
5. Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review. If the issuer’s board of directors, a committee of the board of directors or the officer or officers of the issuer authorized to take such action if board action is not required, concludes that any previously issued financial statements, covering one or more years or interim periods for which the issuer is required to provide financial statements under Regulation A, including Form 1-A, should no longer be relied upon because of an error in such financial statements as addressed in FASB Accounting Standards Codification Topic 250 or IAS 8; or the issuer is advised by, or receives notice from, its independent accountant that disclosure should be made or action should be taken to prevent future reliance on a previously issued audit report or completed interim review related to previously issued financial statements.
6. Changes in Control of Issuer. A change in control of the issuer has occurred or the issuer enters into any arrangement, including any pledge by any person of securities of the issuer or any of its parents, the operation of which may at a subsequent date result in a change in control of the issuer.
7. Departure of Certain Officers. If the issuer’s principal executive officer, principal financial officer, principal accounting officer, or any person performing similar functions, retires, resigns or is terminated from that position.
8. Certain Unregistered Sales of Equity Securities. If the issuer sells equity securities in a transaction that is not registered under the Securities Act or qualified under Regulation A, unless the aggregate securities sold since the last filing with the SEC constitute less than 10% of the number of shares outstanding of the class of equity securities sold.
In addition, an issuer may voluntarily disclose any events or information that the issuer deems of importance to securityholders on a Current Report on Form 1-U, even if such disclosure is otherwise not called for by Form 1-U. Issuers can also voluntarily provide quarterly financial statements on Form 1-U.
Current Reports on Form 1-U must be filed within 4 business days after a triggering event. As a result, I recommend issuers provide their counsel provide prior notice of any of the events described above when practicable and otherwise provide them immediate notice of the occurrence of the foregoing to enable counsel to prepare the report in a timely fashion.
Exit Report on Form 1-Z
An Exit Report on Form 1-Z must be filed within 30 days after the termination or completion of a Regulation A+ offering.
Special thanks to my associate, Kelsey Chase, for his assistance in preparing this post.
 Special note regarding resales under Rule 144 and Rule 144A. To facilitate market making by broker-dealers, Regulation A+ amends Exchange Act Rule 15c2-11(a) such that a Tier 2 issuer’s ongoing reports satisfy the specified information about an issuer and its securities that a broker-dealer must review before publishing a quotation for a security in a quotation medium. However, Tier 2 issuers must voluntarily file quarterly financial statements in addition to the semi-annual financial statement requirements to satisfy the information requirements of Rules 144 and 144A. As such, a Tier 2 issuer that is current in its semi-annual reporting as required under Regulation A+ and voluntarily provides quarterly financial statements on Form 1-U during a given year will have provided reasonably current and adequate current public information for the entirety of such year for purposes of Rule 144 and Rule 144A.