

SEC Adopts Rules to Facilitate Smaller Companies’ Access to Capital - jarsin
http://www.sec.gov/news/pressrelease/2015-49.html#.VRNjljTF-h3

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johnthealy3
The exemption would be limited to companies organized in and with their
principal place of business in the United States or Canada. The exemption
would not be available to companies that:

* Have not filed ongoing reports required by the rules during the preceding two years.

So does this mean that a company wishing to raise capital under A+ needs to
file "annual, semiannual and current event reports" for two years prior to the
offering? If so, wouldn't this regulation effectively force seed-financed
companies to start filing reports immediately? Perhaps I'm misunderstanding
this, but that seems like a significant burden.

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SuperDuperTango
I could read this one of two ways: "a company must have been continuously
filing for a minimum of 2 years", or "a company must have filed at least once
within the last two years". I have no idea which is right (or if i'm
completely wrong on both accounts) :-S

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zaroth
The most important thing was exemption from state blue-sky laws, so this is
great. The second part is who can buy them? I thought A+ was general public.
What does this mean;

    
    
      The final rules also provide for the preemption of state
      securities law registration and qualification requirements for
      securities offered or sold to “qualified purchasers” in Tier 2
      offerings.
    

The only qualifications I heard were you can't invest more than 10% of net
worth?

Reading more, it sounds like it's actually a circular-logic null requirement?

    
    
      In brief, under the proposed rules, Regulation A+ offers would be exempt from state
      securities laws (and review by state regulators) if they are either:
    
      1.  Sold only to “qualified purchasers”, or 
      2.  Offered and sold on a national securities exchange.
    
      Meeting the requirements of a national securities exchange nullifies any benefit
      of pursuing a Regulation A+ offering, so the real issue is whether issuers can
      realistically limit sales only to "qualified purchasers".  Although the term was
      not specifically defined in this context, "qualified purchaser" could reasonably
      be expected to mean "sophisticated investor", which would put Regulation A+
      offerings into a similar world as Regulation 506(c) deals.  Fortunately for issuers,
      according to the proposed definition, a "qualified purchaser" is any purchaser of a
      securities issued to Regulation A+.
    
      If that sounds circular to you, it's only because it is circular. To be exempt from
      state securities law requirements, Regulation A+ sales must be made only to
      "qualified purchasers" and all purchasers in Regulation A+ sales are "qualified
      purchasers".
    

The reporting requirement is simply audited financials, twice a year. I don't
know how SOX plays in... how far is an SME sticking out their neck to sell
shares under A+? What kind of review is the SEC performing? 506(b) was
basically zero-cost, zero-review -- up to the investor to do their own
diligence. Looking forward to learning more about what the A+ process really
looks like. Depending on how it works out, this could _seriously_ shake things
up.

[1] - [http://www.crowdvalley.com/news/road-blocked-battle-over-
the...](http://www.crowdvalley.com/news/road-blocked-battle-over-the-meaning-
of-qualified-purchaser-for-regulation-a)

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codecamper
what does this mean? "with not more than $6 million in offers by selling
security-holders that are affiliates of the issuer"

Thanks! Matt

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zaroth
I think... All but that amount raised must be newly issued shares, with
proceeds going to the company, not previously restricted shared held by
founders and investors, where proceeds go to the shareholder.

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anigbrowl
This Forbes article has a handy summary of what the changes would mean for
people who are not familiar with Regulation A:
[http://www.forbes.com/sites/mraneri/2015/03/11/the-new-
abcs-...](http://www.forbes.com/sites/mraneri/2015/03/11/the-new-abcs-of-
private-placements-506b-and-506c/)

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zaroth
That's 506(c) - General Solicitation. Here's the A+ link:
[http://www.forbes.com/sites/mraneri/2015/03/23/regulation-a-...](http://www.forbes.com/sites/mraneri/2015/03/23/regulation-
a-creating-ipo-lite-investment-opportunities-to-drive-business-growth/)

~~~
anigbrowl
Thanks.

