Wading through investment options can be an arduous task,
but the wide range of choices is exactly what makes the market swell with
money-making opportunities. The U.S. Securities and Exchange Commission (SEC)
has further widened the spectrum with a set of new rules designed to give
smaller companies greater access to capital and, in turn, furnish investors
with even more investment choices.
The new rules update and expand Regulation A, an existing
exemption from registration for smaller issuers of securities, and implement
Title IV of the Jumpstart Our Business Startups (JOBS) Act. The new rules, also
referred to as Regulation A+, will be effective 60 days after publication in the
Federal Register.
The final rules will enable smaller companies to offer and
sell up to $50 million of securities in a 12-month period, subject to
eligibility, disclosure and reporting requirements.
“These new rules provide an effective, workable path to
raising capital that also provides strong investor protections,” SEC Chair Mary
Jo White stated in the news release dated March 25. “It is important for the
Commission to continue to look for ways that our rules can facilitate
capital-raising by smaller companies.”
Regulation A+ provides for two tiers of offerings:
• Tier 1, for
offerings of securities of up to $20 million in a 12-month period, with not
more than $6 million in offers by selling security-holders that are affiliates
of the issuer;
• Tier 2, for
offerings of securities of up to $50 million in a 12-month period, with not
more than $15 million in offers by selling security-holders that are affiliates
of the issuer.
Both Tiers are subject to certain basic requirements while
Tier 2 offerings are also subject to additional disclosure and ongoing
reporting requirements.
The exemption would be limited to companies organized in and
with their principal place of business in the United States or Canada. The
exemption would not apply to businesses that:
• Are already
SEC reporting companies and certain investment companies.
• Have no
specific business plan or purpose or have indicated their business plan is to
engage in a merger or acquisition with an unidentified company.
• Are seeking
to offer and sell asset-backed securities or fractional undivided interests in
oil, gas or other mineral rights.
• Have been
subject to any order of the Commission under Exchange Act Section 12(j) entered
within the past five years.
• Have not
filed ongoing reports required by the rules during the preceding two years.
• Are
disqualified under the “bad actor” disqualification rules.
For more information, read the full release here:
http://www.sec.gov/news/pressrelease/2015-49.html
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