Regulation A (Reg A, Regulation A+ or Reg A+) is a form of equity crowdfunding that allows businesses to advertise, sell and issue securities in their company to both non-accredited and accredited investors. Under Reg A, businesses can raise up to $75M in a 12-month period and are exempt from the more involved registration requirements outlined in the Securities Act of 1933.
Under Regulation A, there are two offering tiers:
- Tier 1 allows issuers to raise up to $20 million in a 12-month period
- Tier 2 allows issuers to raise up to $75 million in a 12-month period
This big difference between the two, outside of the maximum dollar limit, is that Tier 2 offerings require additional financial audit and reporting requirements in order to receive SEC qualification. For more on this, click here to read our blog post: What is the Difference Between Tier 1 and Tier 2 Regulation A Investment Offerings.
Regulation A went into effect in July of 2015 after the SEC adopted the final rules under Section 401 of the JOBS Act.
Businesses who want to utilize Reg A to raise capital must file Form 1-A with the SEC which the SEC must then review and qualify prior to the investment offering going live to the general public.