Hoping to revitalize Regulation A as a viable route for small companies to raise much-needed early capital, the SEC Wednesday adopted final rules transforming the regulation into a two-tier path with raised caps and some relief from the overlapping burden of state and federal oversight.
Unlike the proposed rules released in 2013, the final rules lift the current annual $5 million Reg A cap to $20 million for Tier 1 and limit offers by selling security-holders affiliated with the issuer to $6 million. The cap for Tier 2 is $50 million per 12-month period, as it was in the proposed rules, with a $15 million limit on offers by selling security-holders affiliated with the issuer. (See BioWorld Today, Dec. 19, 2013.)
Removing a large obstacle to Reg A offerings, the rules, which become effective 60 days after being published in the Federal Register, preempt state securities law registration and qualification requirements for Tier