Regulation A – Securities Lawyer 101- Go Public Blog Regulation A (“Regulation A”) was created under Section 3(b) of the Securities Act of 1933 (the “Securities Act”) to exempt public offerings not exceeding $5 million in any 12-month period by non-reporting companies. To rely upon Regulation A, the Issuer must file an offering statement (called a “Form 1-A”) with the Securities and Exchange Commission (“SEC”), which requires disclosure of risk factors, use of proceeds, officer and director background information, corporate and company history, marketing plans as well as a description of the issuer’s products and/or services. Regulation A is not available to SEC reporting issuers but may be used by non-reporting issuers who go public direct, undertake direct public offerings and those who pursue reverse mergers with public shells. The National Securities Markets Improvement Act did not preempt from state regulation offerings made under Regulation A, which means that the issuer must either find an exemption or register in the states where the securities are being offered. Issuers may register with each state by qualification or, for offerings of up to $1 million,
nike free 4.0 v2, on the simpler Small Corporate Offering Registration (SCOR) form. A few states allow registration by coordination with a Regulation A offering and allow the issuer to file the Form 1-A.Regulation A BenefitsThe key benefits of Regulation A offerings include that:• Audited financial statements are not required;• Securities issued in Regulation A offerings may be publicly offered and sold;• The filing of Form 1-A does not cause the issuer to become a reporting company, and as such the issuer does not have Exchange Act reporting obligations after the offering;• Companies may choose one of three formats to prepare the Form 1-A, including a simplified question and answer format;• Sales can be made to accredited and unaccredited investors;• Regulation A is a less expensive alternative to registration, especially with respect to legal, printing, underwriting and accounting fees;• Issuers are allowed to “test the waters” to determine if there is investor interest in its offering; and• Securities issued in compliance with Regulation A can be issued without a restrictive legend and as such, legal and compliance costs are less than for many offering types.Regulation A LimitationsRegulation A has numerous limitations including that Regulation A:• is only available to issuers organized in the United States or Canada;• is not available to issuers who are subject to the 1934 Act’s periodic reporting requirements;• requires issuers have a specific business plan and are not development stage companies; and• is not available to issuers that have been the subject of SEC proceedings.Insignificant deviations from the Regulation A requirements will not disqualify an issuer from relying upon the exemption if: (i) the failure to comply did not pertain to a requirement intended to protect the particular individual; (ii) the failure was insignificant in relation to the offering as a whole, and (iii) a good faith and reasonable attempt was made to comply with the requirements.This memorandum is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. For more information concerning the rules and regulations affecting the use of Rule 144, Form 8K, FINRA Rule 6490,
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