The SEC’s final rule seeks to simplify, align and revise the exempt offering framework in several ways:
- Establishes concise rules for when issuers move from one exemption to another and when they should be integrated, including four ‘safe harbors’ from integration.
- Raises the offering limits:
- Regulation A Tier 2 to $75 million, and $22.5 million for secondary sales
- Regulation Crowdfunding to $5 million
- Rule 504 offerings to $10 million.
- Amends the individual investment limits for investors in Regulation Crowdfunding offerings by removing investment limits for accredited investors, and revises the calculation of investment limits for non-accredited investors.
- Formalizes rules governing certain offering communications, including permitting certain ‘test-the-waters’ and ‘demo day’ activities.
- Aligns provisions and requirements around disclosures, eligibility requirements and bad actor disqualifications.
The amendments are also intended to reduce the complexities and confusion experienced under various requirements and conditions of the current framework, expand investment opportunities and promote access to capital.