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Q: What is the main difference between the new Reg A + and the old one?
A: $5 million versus $50 million.
Q: Limitations on investors?
A: None, under either new or old Reg A. State regulators are involved with tier 1 (up to $20,000,000) issuers.
Q: Filing requirements?
A: Form 1-A to the SEC for review was necessary for old Reg A. With new Reg A +, you file the same offering documents you are distributing to investors.
Q: States?
A: Blue Sky laws apply to Tier 1 (up to $20,000,000) offerings, ameliorated somewhat by a state registration-coordination process. Of course if securities are sold on a national securities exchange state regulators are not involved, unless fraud alleged.
Q: How about re-sales?
A: No restrictions either way.
Q: What does “test the waters” mean?
Q: What is the main difference between the new Reg A + and the old one?
A: $5 million versus $50 million.
Q: Limitations on investors?
A: None, under either new or old Reg A. State regulators are involved with tier 1 (up to $20,000,000) issuers.
Q: Filing requirements?
A: Form 1-A to the SEC for review was necessary for old Reg A. With new Reg A +, you file the same offering documents you are distributing to investors.
Q: States?
A: Blue Sky laws apply to Tier 1 (up to $20,000,000) offerings, ameliorated somewhat by a state registration-coordination process. Of course if securities are sold on a national securities exchange state regulators are not involved, unless fraud alleged.
Q: How about re-sales?
A: No restrictions either way.
Q: What does “test the waters” mean?
Q: What is the main difference between the new Reg A + and the old one?
A: $5 million versus $50 million.
Q: Limitations on investors?
A: None, under either new or old Reg A. State regulators are involved with tier 1 (up to $20,000,000) issuers.
Q: Filing requirements?
A: Form 1-A to the SEC for review was necessary for old Reg A. With new Reg A +, you file the same offering documents you are distributing to investors.
Q: States?
A: Blue Sky laws apply to Tier 1 (up to $20,000,000) offerings, ameliorated somewhat by a state registration-coordination process. Of course if securities are sold on a national securities exchange state regulators are not involved, unless fraud alleged.
Q: How about re-sales?
A: No restrictions either way.
Q: What does “test the waters” mean?
Q: What is the main difference between the new Reg A +
and the old one? A: $5 million versus $50 million. Q: Limitations on investors? A: None, under either new or old Reg A. State laws only apply for tier 1 (up to $20,000,000) issuers. Q: Filing requirements? A: Form 1-A to the SEC for review was necessary for old Reg A. With new Reg A +, you file the same offering documents you are distributing to investors. Q: States? A: Blue Sky laws apply to Tier 1 (up to $20,000,000) offerings, ameliorated somewhat by the state registration by coordination process. Of course if securities are sold on a national securities exchange state law does not apply. Q: How about re-sales? A: No restrictions either way. Q: What does test the waters mean? A: It means you can use sales literature before filing your Form 1A. With the new Reg A +, it means you can use sales literature before filing the offering statement. Q: Financial statement requirements? A: Under old Reg A, you needed a current balance sheet and income statements for the last two years and for any interim period. Financial statements still must be prepared in accordance
with GAAP but do not have to conform to Regulation S-X and do
not have to be audited. Under the new approach, audited financial statements must be included in the offering documents only for tier 2 offerings (up to $50,000,000). Q: Disqualifications? A: Felons and bad actors as defined by Securities Act Rule 262 are disqualified under old Reg A. Felons and bad actors as defined by Section 926 of the Dodd-Frank Act are disqualified under new Reg A +. Both apply. Q: Reporting requirements? A: Under old Reg A, there are no reporting requirements other than to disclose use of proceeds. Under new Reg A, audited financial statements must be filed and given to investors annually (and the SEC is permitted to ask for periodic disclosures). Q: Other differences? A: The new Reg A, Section 12(a) (2) of the Securities Act has heightened civil liabilities for misrepresentation in offering documents such as PPMs. Further, the issuer must file audited financial statements with the SEC each year. Q: What is wrong with Reg A + offerings? A: Reg A + offerings are expensive, especially with state compliance for anything less than $20,000,000, and they are seldom cost effective for an offering under $5 million. This is for more than $5,000,000. Less than that and economics may mean you should stick with, say, Regulation D, Rule 506, either b) or c). Q: Nomenclature confusion? A: New Reg A + is actually Reg A under 3(b)(2) of the Act. It is also referred to as Reg A+while the old Reg A remains simply as Reg A. The new Reg A + is also known as Title IV of the JOBS Act.
Q: Pros and cons?
A: New Reg A is expensive, time consuming, and the most similar to full registration for an issuer. It also has the most potential for raising a sizable amount of money with a good pitch deck properly presented on the right online platforms. Initiating a Reg+ offering, while also pursuing a Reg D 506 offering using Rule 506(b or the new Rule 506(c), is one suggestion we have recently made to more than one client. Q: Can I do a Reg S offering at the same time as a Reg A offering? A: Yes. Q: Can I register and offer securities on foreign stock exchanges, such as the BSE? A: Yes. Regulation S provides a safe harbor for offers and sales of securities outside the United States and includes a resale safe harbor. Securities must be sold in offshore transactions and there can be no selling efforts directed toward the U.S. The SEC has said it will not integrate Reg S offerings with domestic unregistered offerings that are in compliance with Rule 506, Rule 144A and other applicable rules. Rule 144A permits general solicitation for re-sales as long as sales are to qualified institutional buyers. Q: How do I go about doing any of this? A: Contact us. Private Placement Advisors LLC has a team available to help you design and implement a securities-compliant action plan for raising funds. 808-238-0398 2015 Private Placement Publishing, Inc. Follow Douglas Slain at his blog, www.exemptofferings.com.