Navigating Reg A+ – Regulation A+ Attorneys

Regulation A+ Attorneys

Posted by the Regulation A+ Attorneys

On March 25, 2015, the Securities and Exchange Commission (the “Commission”) adopted final rules to implement Section 401 of the Jumpstart Our Business Startups (JOBS) Act by expanding Regulation A into two tiers: Tier 1, for securities offerings of up to $20 million in a 12-month period; and Tier 2, for securities offerings of up to $50 million in a 12-month period. An issuer of $20 million or less of securities can elect to proceed under either Tier 1 or Tier 2.

Regulation A+ expands existing Regulation A, dramatically, opening new doors for capital raising for smaller issuers. Regulation A+ offerings can be used in combination with direct public offerings and initial public offerings as part of a Going Public Transaction.  The exemption simplifies the process of obtaining the seed stockholder required by the Financial Industry Regulatory Authority (FINRA) while allowing the issuer to raise initial capital. Upon qualification of a Regulation A+ offering, companies seeking to obtain a stock trading symbol must locate a sponsoring market maker to file a Form 211 with FINRA.  a+ lawyers

Under Regulation A+, Tier 2 issuers are required to include audited financial statements in their offering documents and to file annual, semiannual, and current reports with the Commission on an ongoing basis. With the exception of securities that will be listed on a national securities exchange upon qualification, purchasers in Tier 2 offerings must either be accredited investors, as that term is defined in Rule 501(a) of Regulation D, or be subject to certain limitations on their investment. Read More

Are Rule 504 Shares Free Trading?


Rule 504 (“Rule 504”) of Regulation D of the Securities Act of 1933, as amended (the “Securities Act”) provides an exemption from the registration requirements of the federal securities laws which allows issuers to offer and sell up to $1,000,000 of their securities in any 12-month period.  Rule 504 is frequently misused to create illegal free trading shares.

As discussed below, fraudsters attempt to make an “end run” around Rule 504 requirements by improperly relying upon state statutes in Delaware, Wyoming, New York and Texas which have been the subject of various SEC enforcement actions. The abuses surrounding Rule 504 are so widespread that the SEC has brought numerous enforcement actions against attorneys rendering legal opinions.

Most often these opinions direct transfer agents to issue certificates representing free trading shares in Rule 504 offerings.

Not surprisingly, DTC often refuses to accept opinions from attorneys rendering bogus opinions to issue free trading shares in reliance upon Rule 504. Read More

How To Use Regulation A+ To Go Public – Regulation A+ Attorneys

Going Public Attorneys- Regulation A+

On March 25, 2015, the Securities and Exchange Commission (the “SEC”) adopted amendments to Regulation A pursuant to the mandate of Section 401(a) of the JOBS Act.  The amended rules known as Amended A+ were adopted to facilitate capital-raising by smaller companies. Regulation A+ offerings can be structured in a going public transaction using a direct public offering and initial public offering as part of a going public transaction.  The exemption simplifies the process of obtaining the seed stockholders required by the Financial Industry Regulatory Authority (“FINRA”) while allowing the company to raise initial capital.

Both public and private companies can use Regulation A+ but the exemption cannot be used by companies that are subject to the SEC’s reporting requirements. Regulation A+ may prove to be a popular exemption for private companies in going public transactions where the company seeks to ease into the public company reporting process. Issuers should also remember that Regulation A+ imposes a ban against certain “bad actors” and expanded Regulation D’s disqualification criteria.

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What Is a Smaller Reporting Company? Going Public Lawyer

Complying with the Smaller Reporting Company Rules
The Securities and Exchange Commission (the “SEC”) adopted a system of disclosure rules for issuers who fall into the category of a smaller reporting company.   This is often a big advantage for companies going public because enables them to take advantage of reduced disclosure requirements. The “smaller reporting company” category includes generally, companies that enter the SEC reporting system with less than $75 million in common equity public float.  Companies that are unable to calculate their public float typically qualify if they have less than $50 million in annual revenues upon entering the system. Companies should determine eligibility for smaller reporting company status based on the last business day of their most recent second fiscal quarter.

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SEC Censures Crowdfunding Website for Selling to US Investors

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Securities Law Blog

On November 12, 2014, the Securities and Exchange Commission (the “SEC”) censured, a Cayman Islands-based crowdfunding website for its failure to implement procedures “reasonably designed” to prevent U.S. investors from using its funding portal as a means to invest in securities offerings. Read More