Regulation A+

Regulation A+ and the “Mini-IPO”: Tips for Startups

Save time and money by using Regulation A+

Regulation A+, sometimes called Reg A+, is frequently referred to as the “mini-IPO.” It is a scaled down version of a traditional IPO that subjects certain early-stage companies to less stringent requirements. The mini-IPO process is less costly, has less onerous ongoing reporting requirements, and involves a shorter timeline to going public.

Regulation A+ and the JOBS Act

President Obama signed The JOBS Act into law on April 5, 2012. The Act implemented a number of regulatory changes designed to make public markets more accessible to emerging growth companies (EGCs). The Securities and Exchange Commission (SEC) defines an EGC as a company with less than $1.07 billion in total gross revenues during its most recent fiscal year.

Two Offering Tiers

Under Tier 1, a company may raise up to $20 million on public markets in a 12-month period while being subject to minimal reporting requirements. Additional state law requirements may apply to Tier 1 offerings though. Tier 2 enables a company to raise up to $50 million in a 12-month period. Tier 2 offerings are exempt from additional obligations under state law.

The Mini-IPO Process

The mini-IPO process under Regulation A+ resembles the traditional IPO process in many ways. Companies that want to issue securities must file a registration statement on Form 1-A. The registration statement for a regular IPO is a Form S-1. After the company submits the registration statement for the offering to the SEC, the SEC will review and provide comments. The offering can commence only once the review process results in the “qualification” of the Form 1-A. A notice of qualification will be posted by the SEC’s Division of Corporation Finance. Unlike a traditional IPO, there are no filing fees associated with submitting a Form 1-A for review to the SEC.

Regulation A+ Ongoing Report Requirements

After qualifying under Regulation A+ as either a Tier 1 or Tier 2 issuer, companies still face ongoing SEC reporting requirements.

Ryan Carpenter serves as Attorney and Managing Director of Carpenter Wellington. Ryan advises clients across a broad set of corporate and commercial matters.

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