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Regulation A+ Expansion

October 01, 2018


Source: CC0 Public Domain

A number of changes to Regulation A+ have taken effect or been proposed since 2015, when the JOBS Act lifted the cap on raises from $5M to $50M. Now that cap may increase to $75M. (Crowdfund Insider)

In November 2017, a House of Representatives panel approved a bill titled, “Regulation A+ Improvement Act of 2017” (HR 4263) which would raise the Reg A+ offerings limit from $50M to $75M. The bill now awaits final review in the Senate.

Strong support for continuing to raise the Reg A+ limit resides among small businesses and security token investors, as it could provide a way to offer blockchain-based securities to both accredited and non-accredited investors.

While this bill raising the Reg A+ limit awaits its ultimate fate, as of May 2018 Congress signed into legislation the “Improving Access to Capital Act” (H.R.2864), which expands the use of Regulation A+ to “all companies, reporting and non-reporting, not only private, non-reporting companies.” (Crowdfund Insider)

We believe the passing of this legislation is significant because it allows reporting companies who trade on over-the-counter markets like the OTC Market to utilize Regulation A+ to “reach an unlimited number of non-accredited investors outside of a fully registered offering – and without being subject to state Blue Sky laws.” (Crowdfund Insider) Previously OTC companies had to register an offering with the SEC if they were contacting more than 35 non-accredited investors for an offering.

A recent report by Audit Analytics found:

  • 290 companies used Regulation A+ offerings to raise $400 million in funds.
  • 9 companies that have completed Reg A+ “mini-IPOs” have listed on NASDAQ or the NYSE.

In July of 2017, ADOMANI Became the first Reg A+ IPO to list on Nasdaq. Lead underwriting was conducted by Boustead Securities, LLC with the offering listed on www.flashfunders.com.

Learn more about Regulation A+ (including the difference between Tier 1 and Tier 2) here: Regulation A+: What You Need to Know