On May 24, the Economic Growth, Regulatory Relief, and Consumer Protection Act (act) was signed into law. In addition to rolling back a number of regulations applicable to financial institutions originating in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the act requires the U.S. Securities and Exchange Commission (SEC) to amend its rules to allow reporting companies to use Regulation A for securities offerings.
Regulation A, or “Regulation A+” as it has been more commonly referred to since it was expanded in 2015, provides an exemption from the registration provisions of the Securities Act of 1933, as amended (Securities Act) for several types of offerings (both primary and secondary) of up to $20 million (Tier 1 Offerings) or $50 million (Tier 2 Offerings) in any one-year period, subject to compliance with certain requirements. See 17 CFR Sections 230.251 through 263. Currently, Regulation A is only available to issuers that are not subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (Exchange Act). However, the act orders the SEC to remove this eligibility requirement, so that Regulation A becomes available to reporting companies, and to change the rules under Regulation A to deem the ongoing reporting obligations associated with Tier 2 Offerings satisfied by continued Exchange Act reporting.
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