On March 25, 2015, the Securities and Exchange Commission (SEC) adopted final rules to amend Regulation A pursuant to the mandate under Title IV of the Jumpstart Our Business Startups Act (JOBS Act) that directed the SEC to create an exemption from registration under new sections 3(b)(2)-(5) of the Securities Act of 1933, as amended (Securities Act), for offerings of up to $50 million of securities within a 12-month period.
The amendments to Regulation A, commonly known as “Regulation A+,” are designed to “jumpstart” Regulation A and spur capital formation by addressing certain impediments in the old Regulation A framework. The rules will become effective on or about June 19, 2015.
While the final rules substantially implement the proposed rules, there are important modifications, including new resale restrictions for affiliates and investment limitations for non-accredited investors, as discussed in more detail below. The final rules also provide federal preemption of state securities law requirements for Regulation A+ offerings in excess of $20 million, provided certain conditions are met, which was a point of contention between the SEC and state regulators during the commenting period.