Reg A+ SEC Reporting Obligations (part 1)

by | Wednesday January 3, 2024
Reg A+ SEC Reporting Obligations (part 1)

Regulation A+ offers great fundraising chances for companies, but understanding SEC reporting obligations might be confusing sometimes.

This guide highlights the key forms, deadlines, and compliance measures associated with Tier 1 and Tier 2 offerings. Essential info to empower you to navigate the landscape of SEC reporting obligations for Reg A+ with more clarity.

No more deciphering cryptic acronyms or wrestling with mountains of paperwork. We’ll demystify Forms 1-K, 1-SA, and 1-U, providing a clear roadmap for accurate and timely filings. Whether you’re a budding Tier 1 startup or a seasoned Tier 2 company seeking expansion, this guide equips you with the knowledge and tools to build investor trust, ensure regulatory compliance, and unlock the full potential of your RegA+ offering.

Ready to step into a world of informed decision-making? In this article you’ll discover:

  • A comprehensive breakdown of essential SEC reporting forms for Tier 1 and Tier 2 offerings.
  • Clear explanations of filing deadlines and compliance requirements.
  • Practical tips and best practices for optimizing your RegA+ reporting strategy.
  • Insights about investor trust and transparency through effective reporting.

Keep reading and join us on the first part of this journey.

Contents

Reg A+ SEC Reporting obligations

With all the talk about Regulation A+, we often overlook what a company (Issuer) must comply with in order to use the regulation. There are a number of  mandatory requirements that an Issuer must comply with when using Regulation A+ (RegA+).

RegA+ reporting requirements entail periodic and ongoing reporting for companies that have conducted offerings under RegA+ of the Securities Act of 1933. These requirements differ depending on whether a company has completed a Tier 1 or Tier 2 offering under RegA+.

Here are the general reporting requirements for RegA+:

 

Tier 1 Offerings

  • Companies that conduct Tier 1 offerings (up to $20 million within a 12-month period) are subject to fewer ongoing reporting requirements.

 

  • Following the offering, Tier 1 issuers must file a Form 1-Z exit report within 30 days after the offering is terminated or completed. This form includes information on the termination or completion of the offering and the proceeds received.

 

  • It should be noted that there have been zero (0) companies using this Tier.

 

Tier 2 Offerings

Companies conducting Tier 2 offerings (up to $75 million within a 12-month period) are subject to more extensive ongoing reporting requirements.

General reporting requirements 
Form 1-K (Annual Report): Tier 2 issuers are required to file an annual report on Form 1-K within 120 days after the end of the fiscal year covered by the report. Includes: audited financial statements, management’s discussion and analysis (MD&A), information about the issuer’s business operations, and other disclosures.
Form 1-SA (Semiannual and Quarterly Reports): Tier 2 issuers must file semiannual reports on Form 1-SA within 90 days after the end of the first six months of the issuer’s fiscal year. Quarterly reports on Form 1-SA are not required.
Current Event Reports: Tier 2 issuers must also submit certain “current event” reports on Form 1-U to report specified events promptly, such as fundamental changes, changes in control, or bankruptcy proceedings.

These reporting obligations aim to provide investors with timely and relevant information about the issuer’s financial condition, business operations, and material events that could impact their investment decisions.

It’s essential for companies that have conducted Regulation A+ offerings to comply with these reporting requirements to maintain regulatory compliance and transparency with investors.

Additionally, the specific reporting requirements and deadlines may vary, and companies should ensure they adhere to the regulations outlined by the Securities and Exchange Commission (SEC). To help in this process is important to seek guidance from legal and financial professionals to navigate these obligations effectively.

SEC Reporting Requirements – Form 1-A

SEC Form 1-A is an offering statement that companies use to register certain securities offerings with the U.S. Securities and Exchange Commission (SEC) under Regulation A of the Securities Act of 1933. Regulation A offers an exemption from full SEC registration requirements and allows smaller companies to offer and sell securities to the public without going through the traditional and more extensive registration process.

 

Form 1-A consists of three distinct parts, each serving a specific purpose:

  • Part I – Notification: This section includes basic information about the issuer, the type of securities being offered, and the intended use of proceeds from the offering. It provides an overview of the offering and the company’s business operations.

 

  • Part II – Offering Circular: This section contains the detailed disclosure document, often referred to as the offering circular. The offering circular includes comprehensive information about the company, its management, business operations, financial statements, risks, intended use of proceeds, and other material information relevant to potential investors. It is similar to a simplified prospectus and aims to provide investors with enough information to make informed investment decisions.

 

  • Part III – Exhibits: This part includes various exhibits and additional documents that support the information provided in Parts I and II. It may include financial statements, legal agreements, consents, and other relevant documents that help to substantiate the disclosures made in the offering circular.

 

Companies planning to offer and sell securities to the public under Regulation A must file Form 1-A electronically through the SEC’s Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system. After the SEC reviews and qualifies the offering statement, the company can proceed with the public offering.

Form 1-A filings are subject to SEC review and comments, similar to the registration process for larger offerings. However, Regulation A offerings generally have less stringent disclosure requirements compared to traditional registered offerings, allowing smaller companies to access the capital markets more easily.

It’s important to note that Form 1-A is specifically tailored for Regulation A offerings and differs from other SEC forms used for different types of offerings and securities registrations. Companies seeking to conduct Regulation A offerings should work closely with legal and financial professionals to ensure compliance with SEC regulations and to prepare the required disclosures accurately and effectively.

Today, we’ve wrapped up the first part of our journey into SEC reporting obligations under Regulation A+. We’ve covered some crucial points regarding REG A+ SEC reporting obligations. So, what’s next?  In the upcoming article, we’ll dive deeper into the intricacies of these reporting requirements. We’ll help you navigate the waters of Regulation A+ and gain a better understanding of its implications for companies.

Stay tuned for Part 2!

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