Regulation A+ and Other Alternatives to a Traditional IPO

CHAPTER 7Potential Changes to Regulation A

It is important to repeat that JOBS Act Title IV and the new Reg A rules adopted by the SEC were brilliantly crafted and if left alone should not materially impede the success of this new and modern approach to public fundraising. The noticeably reduced offering disclosure in Reg A+ deals headed to light reporting, plus the much more scaled, less frequent, and later filed light reporting obligations have led many smaller, and some not so small, companies to enter the Reg A+ world. The very limited SEC review of these filings and unlimited testing‐the‐waters capabilities also have been of significant benefit to issuers.

As we have noted, it is clear that, in developing the Reg A rules, the SEC sought to design an approach that would be very attractive to issuers and underwriters while retaining strong investor protections for smaller offerings. The SEC adopted many improvements from their original rule proposal after the comment period, most notably including a path to full reporting that is enabling companies to go right from their Reg A+ offering to trading on a national exchange.

As with anything new, however, both a little hindsight and education by experience are developing useful and practical suggestions for improvement. Some are ideas that were proposed in comments but which the SEC did not adopt initially. Others arose as deals were progressing and either language in the rules could be clearer, or rules applicable to registered ...