Defining Issues  |  December 2018

Regulation A expanded to reporting companies

Filed under: SEC matters

The SEC’s final rule allows Exchange Act reporting companies to use the Regulation A exemption from registration for their securities offerings. The amendments provide reporting companies additional flexibility when raising capital.

Applicability

Release No. 33-10591; File No. S7-29-18

  • Domestic and Canadian public companies subject to Exchange Act reporting requirements

Relevant dates

Effective January 31, 2019

Key impacts

The Economic Growth, Regulatory Relief, and Consumer Protection Act mandated the SEC to revise Regulation A (Reg A) to allow Exchange Act reporting companies to use the exemption. 

The amendments: 

  • Allow Exchange Act reporting companies to use the exemption from registering up to $50 million of securities in a 12-month period 
  • Permit Exchange Act reporting companies to meet their Reg A reporting obligations through their Exchange Act reporting
  • Eliminate the automatic suspension provision within Reg A when a company subsequently becomes subject to Exchange Act reporting requirements 
  • Clarify what happens if a company’s Exchange Act reporting obligation is terminated or suspended
  • Make conforming changes to Reg A and Form 1-A

Implementation guidance is provided for:

  • Financial statements provided in Form 1-A
  • New or revised accounting standards
  • Canadian issuers 
  • Securities ‘held of record’ for Exchange Act Section 12(g)