A Regulation A+ offering is an exemption from the standard registration requirements of the Securities Act of 1933, established by the SEC's Regulation A under the JOBS Act of 2012. It functions as a "mini-IPO," enabling private companies to raise up to $75 million in a 12-month period by selling equity or debt securities to both accredited and non-accredited investors. Unlike a traditional private placement (e.g., Regulation D), a Reg A+ offering requires the issuer to file an offering statement (Form 1-A) with the SEC for qualification, which includes providing investors with an offering circular containing detailed disclosures about the business.
LABS
Glossary
Reg A+ Offering
A U.S. securities exemption (Regulation A, Tier 2) allowing public offerings of up to $75 million to both accredited and non-accredited investors, subject to SEC qualification.
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definition
SECURITIES REGULATION
What is a Reg A+ Offering?
A Reg A+ offering is a type of securities exemption under U.S. law that allows private companies to raise capital from the general public, not just accredited investors.
There are two distinct tiers under Reg A+. Tier 1 permits raises of up to $20 million in a 12-month period and requires both federal SEC qualification and registration or exemption in each state where securities are offered. Tier 2, the more commonly used option, allows raises of up to $75 million but imposes additional requirements: issuers must provide audited financial statements and are subject to ongoing reporting obligations, including annual, semi-annual, and current event reports. Crucially, Tier 2 limits the amount non-accredited investors can invest to no more than 10% of their annual income or net worth.
The primary advantages of a Reg A+ offering include democratizing investment by opening early-stage opportunities to the public, providing liquidity potential as securities are not subject to the same restrictive legends as private placements, and enabling companies to "test the waters" with potential investors before filing official documents. For blockchain and crypto projects, Reg A+ has been used to offer security tokens, creating a compliant pathway for public token sales. However, the process involves significant legal, accounting, and marketing costs due to the required disclosures and ongoing reporting duties.
etymology
REGULATORY FRAMEWORK
Origin and Etymology
The term 'Reg A+' originates from U.S. securities regulations, specifically the amendments made to Regulation A under the Jumpstart Our Business Startups (JOBS) Act.
A Regulation A+ offering is a type of securities exemption established by the U.S. Securities and Exchange Commission (SEC) that allows private companies to raise capital from the public. The '+' denotes the significant expansion of the original Regulation A under Title IV of the JOBS Act of 2012. The original Regulation A, created in 1936, was a little-used exemption due to its low fundraising cap of $5 million and the burden of complying with state-by-state securities laws ("blue sky" laws). The JOBS Act reforms, finalized by the SEC in 2015, modernized this rule to facilitate capital formation for emerging growth companies.
The etymology is directly tied to its regulatory lineage. The core term "Regulation A" is part of the SEC's alphabetical catalog of rules governing securities offerings. The appended "+" is an informal but universally adopted marker signifying the enhanced, two-tiered structure introduced by the amendments. This created Tier 1 (offerings up to $20 million) and Tier 2 (offerings up to $75 million), with Tier 2 providing preemption from state securities registration, a key feature that addressed the original regulation's major flaw. The 'plus' effectively signifies 'more': more capital, more accessibility, and fewer regulatory hurdles compared to its predecessor.
The creation of Reg A+ was a legislative response to the need for a "mini-IPO" pathway, bridging the gap between traditional private placements (like Reg D) and a full-fledged, costly initial public offering. Its design specifically aimed to democratize investment by allowing non-accredited investors to participate in early-stage company fundraising, a privilege typically reserved for wealthy, accredited investors in other private offerings. This origin story positions Reg A+ as a cornerstone of equity crowdfunding and public capital formation for the modern era.
key-features
REGULATION A+
Key Features of Reg A+ (Tier 2)
Regulation A+, Tier 2 is a securities exemption allowing companies to raise up to $75 million from both accredited and non-accredited investors through a public offering.
01
Public Solicitation & Advertising
Issuers are permitted to generally solicit and advertise their offering to the public, a key distinction from private placements like Regulation D. This allows for marketing through websites, social media, and traditional media channels to reach a broad investor base.
02
Investment Limits for Non-Accredited Investors
To protect retail investors, Tier 2 imposes limits on the amount non-accredited investors can commit. The limit is the greater of 10% of annual income or 10% of net worth (excluding primary residence). There are no investment limits for accredited investors.
03
Ongoing Reporting Obligations
Issuers must file annual (Form 1-K), semi-annual (Form 1-SA), and current event (Form 1-U) reports with the SEC. This creates ongoing transparency but is less burdensome than the full reporting required for public companies (e.g., 10-K, 10-Q).
04
State Blue Sky Law Preemption
A major advantage of Tier 2 is preemption from state securities registration and qualification requirements. While issuers must file with the SEC, they are generally exempt from state-level review, significantly simplifying the compliance process across multiple jurisdictions.
05
Financial Statement Requirements
Issuers must provide audited financial statements for the last two fiscal years (or since inception if shorter). The audit must be performed by an independent public accountant registered with the PCAOB, ensuring a verified baseline of financial disclosure.
06
Secondary Trading Eligibility
Securities sold in a qualified Reg A+ offering are not restricted securities. This means they can be freely resold by purchasers without holding period restrictions, providing investors with liquidity, though trading typically occurs on an OTC marketplace.
how-it-works
SECURITIES REGULATION
How a Reg A+ Offering Works
A detailed breakdown of the process, requirements, and mechanics of conducting a securities offering under Regulation A+, an exemption from full SEC registration.
A Regulation A+ (Reg A+) offering is a two-tiered securities exemption that allows private companies to raise capital from the public without undergoing a traditional initial public offering (IPO). Governed by the U.S. Securities and Exchange Commission (SEC) under Tier 1 (up to $20 million) and Tier 2 (up to $75 million), it requires the issuer to file an offering statement (Form 1-A) for qualification. This process involves drafting a detailed disclosure document, undergoing SEC review, and, upon qualification, marketing and selling the securities to both accredited and non-accredited investors.
The core of the process is the Form 1-A offering statement, which consists of three parts: the notification, the offering circular, and exhibits. The offering circular is the primary disclosure document for investors, containing detailed information about the company's business, management, risk factors, and use of proceeds. For Tier 2 offerings, issuers must also provide audited financial statements and file annual, semiannual, and current reports. Unlike a full IPO, a Reg A+ offering does not create a listing on a national exchange by itself, though issuers often use it as a precursor to an uplisting.
A critical distinction is the marketing phase. Once the Form 1-A is initially filed with the SEC, the issuer can begin "testing the waters"—soliciting non-binding interest from the general public using marketing materials. However, no actual sales can occur until the SEC qualifies the offering statement. Post-qualification, the issuer and its broker-dealers can actively solicit and sell securities. For Tier 2 offerings, there is a purchase limit for non-accredited investors, who cannot invest more than 10% of their annual income or net worth, whichever is greater.
The final stage involves closing the offering and managing ongoing obligations. Once the target capital is raised, the offering closes, and funds are disbursed to the company. Tier 2 issuers enter a regime of ongoing reporting, requiring them to file annual reports on Form 1-K, semiannual reports on Form 1-SA, and current reports on Form 1-U to maintain their public reporting status. This structure provides companies with access to public capital while offering investors a level of transparency and protection that bridges the gap between private placements and a full IPO.
COMPARISON
Reg A+ vs. Other Fundraising Exemptions
A side-by-side comparison of key regulatory exemptions for capital formation in the United States.
| Feature | Regulation A+ (Tier 2) | Regulation D (Rule 506c) | Regulation Crowdfunding (CF) | Regulation S |
|---|---|---|---|---|
Maximum Offering Size | $75 million | Unlimited | $5 million | Unlimited (outside U.S.) |
Investor Accreditation Required? | ||||
General Solicitation Permitted? | ||||
SEC Qualification/Review Required? | ||||
State Blue Sky Law Preemption? | ||||
Ongoing Reporting Obligations | ||||
Investment Limits for Non-Accredited | None | None | Based on income/net worth | |
Resale Restrictions (Holding Period) | Freely tradable | 1 year (Rule 144) | 1 year |
examples
REGULATION A+
Examples and Use Cases
Regulation A+ (Reg A+) is an SEC exemption that allows private companies to raise up to $75 million from the public, including non-accredited investors. These real-world examples illustrate how companies have leveraged this capital-raising pathway.
04
Contrast with Regulation D (Reg D) 506(c)
While both are SEC exemptions, Reg A+ and Reg D Rule 506(c) serve different purposes. This comparison highlights key use cases:
- Reg A+: Public solicitation allowed; non-accredited investors permitted; requires SEC review and qualification; maximum raise of $75 million.
- Reg D 506(c): Public solicitation allowed; accredited investors only; no SEC review, only a filing (Form D); no ceiling on the amount raised. Companies choose Reg A+ to build a broad, public shareholder base, while Reg D is for faster, larger raises from sophisticated investors.
05
Post-Offering: Secondary Trading on ATS
A major advantage of Tier 2 Reg A+ offerings is that the securities are not restricted and can be freely resold. This enables secondary trading on platforms like alternative trading systems (ATS). For example, tokens issued under Reg A+ (like Blockstack's STX) can trade on SEC-registered ATS platforms, providing liquidity to investors without a traditional IPO. This creates a use case for Reg A+ as a bridge between private fundraising and public markets.
06
Real Estate Investment Trusts (REITs)
Real Estate Investment Trusts (REITs) frequently use Reg A+ to raise capital from the public for property acquisitions. This use case leverages the ability to pool investments from many individuals. For instance, a REIT might file a Reg A+ offering to raise $50 million from thousands of investors to purchase a portfolio of apartment buildings, offering them shares and a potential dividend yield, all under a regulated, transparent framework.
security-considerations
REGULATION A+
Legal and Structural Considerations
Regulation A+ (Reg A+) is a U.S. Securities and Exchange Commission (SEC) exemption that allows private companies to raise up to $75 million from the public, including non-accredited investors, through a streamlined offering process.
01
Two Tiers of Offerings
Reg A+ is divided into two distinct tiers, each with its own set of rules and limits.
- Tier 1: Allows capital raises of up to $20 million in a 12-month period. It requires SEC and state-level (blue sky) qualification, which can be complex and costly.
- Tier 2: Allows capital raises of up to $75 million in a 12-month period. It preempts state securities laws, simplifying compliance, but requires audited financial statements and ongoing reporting obligations.
02
The Offering Circular & Qualification
Instead of a full registration statement, companies file an Offering Circular (Form 1-A) with the SEC for qualification. This document is less burdensome than an S-1 but still requires detailed disclosures about the business, risks, and use of proceeds. The SEC must qualify the offering before any securities can be sold, a process that involves review and comment. This is distinct from a mere filing; it is an active approval step.
03
Investor Eligibility & Limitations
A key feature of Reg A+ is its accessibility to non-accredited investors. However, Tier 2 imposes specific investment limits on them to mitigate risk:
- Non-accredited investors cannot invest more than the greater of 10% of their annual income or 10% of their net worth (excluding primary residence).
- There are no investment limits for accredited investors in either tier.
- All investors must receive the qualified Offering Circular.
04
Ongoing Reporting Obligations (Tier 2)
Companies conducting a Tier 2 offering commit to significant ongoing disclosure, creating a "mini-public company" status.
- Annual Reports: Must file Form 1-K within 120 days of fiscal year-end.
- Semi-Annual Reports: Must file Form 1-SA.
- Current Events: Must file Form 1-U for material events like exit events or changes in control.
- Failure to comply can lead to suspension of the offering's qualification.
05
Testing the Waters & Marketing
Reg A+ permits "testing the waters" both before and after filing the Offering Circular. Companies can use general solicitation and advertising to gauge investor interest with pre-filing materials. All testing-the-waters materials must later be filed with the SEC. After qualification, marketing must be accompanied or preceded by the final qualified Offering Circular. This flexibility is a major advantage over traditional private placements under Rule 506(c).
06
Secondary Trading & Liquidity
Securities sold in a Reg A+ offering are not restricted securities. This is a critical structural difference from most private placements. Once the offering is qualified and closed, the securities can be freely resold by both accredited and non-accredited investors without holding period restrictions, provided the company is current in its Tier 2 reporting (if applicable). This potential for immediate liquidity on alternative trading systems (ATS) or national exchanges is a key selling point.
REGULATION A+
Common Misconceptions About Reg A+
Regulation A+ is a complex securities exemption often misunderstood by founders and investors. This glossary clarifies the most frequent points of confusion.
No, a Reg A+ offering is not an Initial Public Offering (IPO). While both allow companies to raise capital from the public, they operate under fundamentally different regulatory frameworks. An IPO involves registering securities with the SEC under the full Securities Act of 1933, requiring extensive and costly disclosures (Form S-1). Reg A+ is an exemption from that full registration, using a streamlined process (Form 1-A). A company completing a Reg A+ offering is not automatically listed on a national exchange like the NYSE or Nasdaq, though it can use the offering to later qualify for such a listing. The key distinction is the level of regulatory scrutiny, ongoing reporting requirements, and associated costs.
REGULATION A+
Frequently Asked Questions (FAQ)
A Regulation A+ (Reg A+) offering is a type of securities exemption in the United States that allows private companies to raise capital from the general public, including non-accredited investors. These are commonly referred to as 'mini-IPOs' and are governed by the SEC under Tier 1 and Tier 2 rules.
A Regulation A+ offering is a securities exemption under the U.S. Securities Act that allows private companies to raise up to $75 million from both accredited and non-accredited investors in a public offering. It functions as a 'mini-IPO' with two tiers: Tier 1 for raises up to $20 million and Tier 2 for raises up to $75 million. Unlike a traditional private placement (e.g., Regulation D), a Reg A+ offering requires the issuer to file an offering statement (Form 1-A) with the SEC for qualification, which includes providing detailed disclosures similar to a prospectus. Once qualified, the securities can be publicly advertised and traded, though Tier 2 offerings impose ongoing reporting requirements.
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