Great news for capital formation – this morning the SEC approved the rules for Reg A+, aka Title IV of the JOBS Act!
More detailed overview coming soon, but some quick details…
When: rules become effective in 60 days.
What: There are 2 “tiers”
Tier 1 – requires SEC and state blue sky reviews & fees, raise up to $20M per year, open to unaccredited investors, no audit required
Tier 2 – requires SEC review but no state blue-sky review (“preemption”), raise up to $50M per year, also open to unaccredited investors (limited to the greater of 10% of income or net worth), annual audit required, must use a registered transfer agent (FundAmerica will be helping to simplify this for issuers)
Both – are open to unaccredited investors, can be used by startups as well as existing businesses, and are exempt from 12(g) registration thresholds
How: Prepare offering doc’s, get your audit done, use “8a short-form”, submit draft offering to SEC, file electronically via EDGAR
Compare to 506(c) – takes way more time to launch an offering, and far more costly in terms of legal fees, accounting costs, and annual reporting obligations. However, it enables you to sell to unaccredited investors and creates a tradable security.
More details soon!