Buried within the “Economic Growth, Regulatory Relief and Consumer Protection Act” that was signed into law last week, was an expansion of Regulation A or Reg + that it is popularly called. The securities exemption is now available to not just private companies but also for “reporting” companies that trade on an exchange or ATS. Reg A+, one of the three crowdfunding exemptions created by the JOBS Act of 2012, enables issuers to raise up to $50 million in a mini-IPO type structure. Both accredited and non-accredited investors may participate in a Reg A+ offer. OTC Markets, perhaps the biggest proponent to expand Reg A+ to companies that are publicly traded, has applauded the expansion of the law – calling it a “pivotal milestone for smaller companies and issuers.” OTC Markets may see listed companies that trade on its marketplace now take advantage of the law.
“We are pleased to see the culmination of our advocacy to extend the benefits of Regulation A+ eligibility to SEC reporting companies,” said Cromwell Coulson, CEO and President of OTC Markets Group. “This key change will be instrumental in leveraging technology to fuel small company capital formation and increase the number of public companies that can efficiently access our capital markets.”
The update to Reg A+, that was originally a stand alone bill “Improving Access to Capital Act,” was a bipartisan initiative that was sponsored by Representative Kyrsten Sinema (D-AZ). The legislation originally passed the House of Representatives in September 2017 in a lopsided vote of 404 to 3.
Reg A+ has experienced mixed results since its creation as platforms and issuers have experimented as to how best utilize the law. By broadening the pool of potential issuers, Reg A+ may gain additional footing as a path to raise additional funds for smaller companies.