SEC Provides Guidance On Regulation A+
The Securities and Exchange Commission’s (SEC’s) Division of Corporation Finance in November issued four new Compliance & Disclosure Interpretations (C&DIs). One addressed the integration of successive offerings under Regulation D of the Securities Act of 1933, which was discussed here. The division also issued three new CDI’s relating to Regulation A+.
Regulation A+ allows companies to conduct a mini-public offering and raise up to $50M, but with more limited disclosure requirements than normal in a full fledged IPO. Compared to registered offerings, smaller companies in earlier stages of development might be able to use the rule to more cost-effectively raise money.
The Corp Fin staff addressed aspects of offerings under Regulation A+ with three CDIs on Nov. 17. The highlights include:
- An issuer that seeks to qualify an additional class of securities by post-qualification amendment to a previously qualified offering statement under Regulation A+ would satisfy the requirements of Item 4 to Part 1 of Form 1-A by providing responses that relate only to the additional class of securities for which qualification is being sought.
- A change of 20% or less in the maximum aggregate offering price in a qualified offering statement, which does not require a post-qualification amendment, may be measured from either the high end (in the case of an increase in the offering price) or the low end (in the case of a decrease in the offering price) of that range. However, that provision cannot be used to offer securities where the maximum aggregate offering price would result in the offering exceeding the limit set forth in Rule 251(a) or if the change would result in a Tier 1 offering becoming a Tier 2 offering.
- Consistent with the treatment of "emerging growth companies" in Section 71003 of the Fixing America's Surface Transportation (FAST) Act, a company filing or confidentially submitting an offering statement under Regulation A+ may omit financial information for historical periods if it reasonably believes the omitted information will not be required to be included in a filing at the time of qualification. Issuers must amend the offering statement prior to qualification to include all the required financial information and redistribute solicitation materials at the time that any previously omitted financial information has been included in an amended offering statement.