Tomorrow (May 6, 2025), the Securities and Exchange Commission (SEC), Small Business Capital Formation Advisory Committee (SBCFAC) will meet to discuss the Regulation A, or Reg A+, securities exemption.
Reg A existed before the JOBS Act of 2012, but few issuers utilized the exemption. Following an update under the JOBS Act, Reg A+, sometimes described as a mini-IPO type exemption, has seen renewed interest and utilization.
SBCFAC will review how companies currently use the exemption while considering its challenges and what may be improved. Daniel Forman, a Partner at Lowenstein Sandler, will give a presentation on the advantages and challenges of Reg A.
Anna Pinedo, a Partner at Mayer Brown and a frequent commentator on securities regulation, including securities crowdfunding, shared her thoughts, wondering if there will be any attention paid to the fact that usage of the exemption has been in decline.
Most Reg A offerings have been completed without issuers using placement agents or underwriters, and Reg A offerings generally have not functioned as “stepping stones” to IPOs or as a replacement for smaller IPOs,” said Pinedo.
She noted that several bills are working their way through Congress that seek to make Reg A a more compelling option for firms in need of growth capital. One such bill would raise the exemption from its current $75 million funding cap to $150 million.
“Even if the dollar offering threshold were increased to $150 million, market participants may be reluctant to rely on Reg A unless the blue sky exemption is addressed for resales of Tier 2 securities. The SEC could take action to address the resale issues on its own and this would be quite meaningful,” she said.
Pinedo also proposed that the SEC allow foreign issuers to utilize Reg A.
One of Reg A’s biggest challenges is the time it takes to get qualified by the SEC. CI has heard frequent complaints that an issuer may run out of money by the time the offering documents are reviewed and approved, and thus, Reg D becomes a more compelling option as it is just a notice filing.
The meeting begins at 10AM ET and will be live-streamed on the SEC website.