Regulation A+

Regulation A+, formally known as Regulation A as amended by the SEC pursuant to the Jumpstart Our Business Startups (JOBS) Act of 2012, was intended to create an accessible pathway for smaller and emerging-growth companies to raise capital from the general public — including non-accredited investors — without the full cost and compliance burden of a traditional registered initial public offering. The rule as expanded by the SEC in 2015, and further updated in 2021, created two tiers of offerings.

Tier 1 permits offerings of up to $20 million in any 12-month period. Tier 1 issuers must provide an offering circular reviewed by the SEC, but they are not required to have their financial statements audited by an independent accountant, and they are subject to state blue sky registration requirements in each state where they offer securities. The lower cost of a Tier 1 offering is partially offset by the burden of navigating state-by-state qualification.

Tier 2 permits offerings of up to $75 million in any 12-month period (raised from $50 million in 2021). Tier 2 offerings require audited financial statements prepared in accordance with U.S. GAAP or IFRS, an offering circular filed with and reviewed by the SEC, ongoing reporting obligations (annual reports on Form 1-K, semi-annual reports on Form 1-SA, and current event reports on Form 1-U), and compliance with investor limitations for non-accredited purchasers (limited to 10% of their greater of annual income or net worth). In exchange, Tier 2 issuers receive federal preemption from state blue sky registration, though state anti-fraud provisions still apply.

One distinctive feature of Regulation A+ is that the securities sold are not restricted in the way that Regulation D securities are — purchasers can freely resell their shares without holding period requirements, making the offering more comparable to a traditional IPO from a liquidity standpoint. Some Reg A+ issuers have listed their shares on national exchanges such as Nasdaq or the NYSE American after completing their offering.

Critics note that Reg A+ has been used to some degree by issuers of lower quality, including speculative real estate projects and technology ventures with limited operating history, and that retail investors participating in these offerings may lack the sophistication to evaluate the risks. The SEC has brought enforcement actions against Reg A+ issuers for material misstatements and fraud, underscoring that the reduced disclosure requirements do not eliminate the issuer's obligation to be truthful.