SEC Issues Regulation A+ Rules; Increases Access to Capital Markets for Smaller Issuers
|April 7, 2015||View for printing|
SUMMARY. On March 25th, the Securities and Exchange Commission (the "SEC") adopted new rules to amend Regulation A under the Securities Act of 1933, as amended (the "Securities Act"). The new rules, referred to as "Regulation A+," were mandated by Title IV of the Jumpstart Our Business Startup ("JOBS") Act with the goal of increasing access to the capital markets for smaller issuers. The adopting release for the Regulation A+ rules is available here.
Regulation A+ expands upon and modernizes the existing Regulation A. To date, Regulation A has been little used due to its limited offering size (up to $5 million of securities in a 12-month period) and the disclosure burdens it imposes relative to other private placement exemptions, such as Regulation D. Regulation A+, however, may provide a meaningful new tool for private issuers wishing to access the capital markets.
It is not clear to me why an experienced angel investor would fund a startup company via Reg A+ (versus a Reg D 506 (b) offering) considering the additional regulations imposed and the added uncertainty of investing alongside unaccredited investors?
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