Regulation A+
SEC rules under Title IV of the JOBS Act creating two tiers of "mini-IPO" offerings. Tier 1: up to $20 million annually with state-level registration. Tier 2: up to $75 million annually with SEC qualification, audited financial statements, ongoing reporting, and state-law preemption. Securities are freely tradable post-offering (subject to investor type limits in Tier 2). Form 1-A offering circular required. Useful intermediate path between Reg D private placements and full Form S-1 IPO.
Regulation A+ (also called Reg A) is an SEC framework under Title IV of the Jumpstart Our Business Startups (JOBS) Act of 2012 creating "mini-IPO" offerings for non-accredited investors. The framework provides two tiers: Tier 1 (up to $20 million) requires state-level registration; Tier 2 (up to $75 million) requires SEC qualification with state-law preemption. Reg A+ is an intermediate path between Reg D private placements (limited to specific investor types) and full Form S-1 IPO (substantial cost and ongoing reporting). Securities issued under Reg A+ are freely tradable, supporting secondary liquidity.
Tier 1 vs. Tier 2, key differences
The two Reg A+ tiers: (1) Tier 1: up to $20 million annually; state-level registration required (substantial multi-state burden); no ongoing SEC reporting; no audited financial statement requirement; (2) Tier 2: up to $75 million annually; SEC-only qualification (state-law preemption); ongoing semiannual and annual SEC reporting; audited financial statement requirement; per-investor investment limits for non-accredited (10% of greater of annual income or net worth). Most issuers use Tier 2 because the state-law preemption avoids the multi-state registration burden, typically more cost-efficient than Tier 1's state-by-state approach.
Form 1-A offering circular
Reg A+ offerings require Form 1-A offering circular qualified by the SEC. Form 1-A is a comprehensive disclosure document parallel to Form S-1 but with reduced requirements: (1) business description; (2) risk factors; (3) management discussion and analysis; (4) directors, officers, and significant employees; (5) compensation of directors and executive officers; (6) security ownership; (7) related-party transactions; (8) financial statements, Tier 2 requires audited; (9) use of proceeds; (10) plan of distribution. The SEC qualification process typically takes 3-6 months including comment-and-response cycles.
Per-investor limits (Tier 2)
Tier 2 imposes per-investor investment limits for non-accredited investors: 10% of the greater of annual income or net worth (per offering). Accredited investors face no per-investor limits. The limit applies on per-offering basis, not aggregate across all offerings. The per-investor limits are intended to protect retail investors from concentration risk while still permitting meaningful retail participation. Issuers must obtain investor representations regarding the limits.
Testing the waters
Reg A+ permits "testing the waters", issuers can solicit investor interest before filing Form 1-A: (1) before filing, solicitation permitted with required legends; (2) after filing but before qualification, solicitation permitted with offering circular delivery requirement. Testing the waters allows: (a) gauging investor interest before incurring offering costs; (b) building investor list; (c) refining offering terms based on feedback. Subject to anti-fraud rules, false or misleading communications create exposure regardless of formal status.
Ongoing reporting (Tier 2)
Tier 2 issuers face ongoing SEC reporting: (1) Form 1-K (annual report), comprehensive annual disclosure with audited financial statements; (2) Form 1-SA (semiannual report), interim financial statements and updated information; (3) Form 1-U (current report), for material events; (4) Form 1-Z (suspension/termination of reporting). The reporting burden is substantial, comparable to but somewhat lighter than full Exchange Act reporting. Issuers should evaluate reporting cost as part of Reg A+ economics.
Securities tradability
Reg A+ securities are freely tradable after qualification (no Rule 144-style holding period for non-affiliates), supporting secondary liquidity. This distinguishes Reg A+ from Reg D (where Rule 144 typically requires 6-month or 1-year holding). Some Reg A+ issuers list securities on OTC markets or specialized platforms for secondary trading. The free tradability supports retail investor participation but creates ongoing market dynamics for issuer.
Comparison to alternatives
Reg A+ comparison: (1) vs. Reg D, Reg D limits to specific investor types but no offering size limit; Reg A+ permits non-accredited but caps offering size; (2) vs. Reg CF, Reg CF caps at $5M; Reg A+ Tier 2 caps at $75M; (3) vs. Form S-1 IPO, Form S-1 has no offering limit but substantially higher cost ($2-5M+ typical); Reg A+ has lower cost ($300K-$1M typical); (4) vs. Reverse Merger, different mechanism for going public; Reg A+ is direct primary offering. Reg A+ fills the gap between Reg CF and full IPO for offerings $5M-$75M targeting retail investors.
For Texas issuers considering Reg A+, the framework supports specific use cases: (1) consumer-facing brands with retail investor base; (2) pre-IPO companies wanting public-style distribution before full S-1; (3) companies needing $5M-$75M without limiting to accredited investors; (4) issuers wanting tradable securities post-offering. Best practice: (1) evaluate Tier 1 vs. Tier 2, most use Tier 2 for state preemption; (2) prepare for substantial offering costs ($300K-$1M typical) including SEC counsel, audit, marketing; (3) plan for 6-12 month timeline from initial preparation to qualification; (4) coordinate with funding portal or broker-dealer for offering execution; (5) evaluate ongoing reporting burden as part of total cost; (6) consider OTC listing for secondary trading. For investors: (1) understand per-investor limits (10% threshold for non-accredited); (2) recognize free tradability post-offering; (3) review Form 1-A offering circular thoroughly. Common pitfall: issuers underestimating SEC qualification timeline (typically 3-6 months including SEC comments) and total offering cost, Reg A+ is substantially more expensive and slower than Reg D.