The SEC recently adopted final rules amending Regulation A to permit eligible private (i.e., non-SEC-reporting) companies to conduct public securities offerings of up to $50 million in a 12-month period without Securities Act registration. The amendment, known as “Regulation A+”, was mandated by the Jumpstart Our Business Startups Act (the “JOBS Act”) and takes effect on June 19, 2015. Its aim is to promote small company capital formation by increasing the maximum amount which may be raised under Regulation A (from $5 million to $50 million), and by streamlining reporting and disclosure requirements.
Regulation A+ provides an attractive financing alternative for private companies seeking to raise more capital than might be available through a private placement or institutional sources, but less than would justify the expense and risk of an IPO. Upon issuance, the securities are unrestricted and freely tradable.