Insight

Today is an exciting day for companies that need to raise capital because Reg A+ finally goes into effect.

Reg A+ is the nickname for SEC Regulation A, as amended by the SEC. Reg A has been around for many years but was rarely used because it was available only to very small financings, had too many limitations and was costly.

As part of the Jumpstart Our Business Startups (JOBS) Act, enacted in 2012, the SEC was instructed to update Reg A to make it more useful as a capital-raising tool. Reg A+ is the result.

The main benefits of Reg A+ include:

  • Companies can raise up to $50 million every 12 months.
  • Insiders can sell their shares in a Reg A+ offering.
  • Investors in a Reg A+ offering have immediate liquidity – they can sell their shares once the offering is completed and don’t have to hold them for a period of time.
  • Some Reg A+ offerings are exempt from state securities or “blue sky” laws.
  • Some Reg A+ offerings are easier to list on an exchange.

* * *

We think Reg A+ provides a great opportunity to raise capital and can be looked at as an alternative to either a private placement or an IPO.

But don’t take our word for it. Here is what others are saying about Reg A+: Small firms aim to raise capital more easily under new rule (The Wall Street Journal, 6/17/15)

If you have any questions about Reg A+, please feel free to reach out to any of the attorneys in Gunster's securities and corporate governance practice.

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