Five Key Points And Immediate Benefits For You About “Regulation A Plus” Stock


“Reg A Plus Stock” under the Dodd-Frank Act statutory reform, finally has been made eligible for application through the Securities and Exchange Commission (“SEC”), on March 27th, 2015. Here are immediate key points and benefits you need to know for your company about “Reg A Plus Stock:”

  • Reg A Plus Stock, once qualified by the SEC, is freely tradable, at the federal level.
  • Reg A Plus Stock initial offerings, up to $50m, qualify for “Tier II” treatment, so long as you have an audit and maintain semi-annual and material event reporting requirements. Offerings up to $20m can elect for “no-audit and GAAP compliant “and minimal reporting requirements, or they can get audits and apply for Tier II status and benefits.
  • Reg A Plus Stock Tier II gets exemptions from state regulatory blue sky review, and from Securities Exchange Act 1934 Act mandatory 12(g) registration (“SEA 12 (g)”). So if you exceed 500 non-accredited shareholders, or 2000 total shareholders, and you are current with Tier II relaxed reporting requirements, you do not have to register as a reporting company under SEA 12 (g). Registration under SEA 12 (g) does mean enhanced compliance and expense for a developmental stage company, so if it can be avoided initially, that is highly preferable.
  • Shell companies which have a viable operating business plan, and a bona fide and actual intent to carry out this business plan, out are acceptable, both for Tier One and Tier Two qualification under Regulation A. Blank check companies, including those who seek a merger target, are not eligible for Regulation A qualification.
  • An application for Tier I Reg A Plus Stock, for an offering up to $20m, does not require an audit. Tier I still needs to “blue sky” qualify at the state level for the primary or initial offering to investors in the particular state, as well obtain the initial qualification for Reg A Plus at the SEC

In short, filing an offering qualification statement with the SEC under Regulation A Plus is a very effective way to issue free trade stock for a private company which wishes to raise capital and begin trading. According to SEC staff, the most important factor to obtaining timely Regulation A qualification is making sure your Regulation A offering statement is prepared by qualified and experienced outside securities counsel and professionals.


By Paula A. Argento, Esq.

202.538.2473 (Tel.)


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