Financing for Smaller CompaniesBy
Companies that want to raise up to $50 million in a 12-month period will now be exempt from having to get registration approval from state securities regulators. That exemption provision is the key to the Securities & Exchange Commission (SEC) final Regulation A+ rule published on March 25. Publishing the final rule was one of the requirements of the Jumpstart Our Business Startups (JOBS) Act, the law passed in 2012 to help small and medium-size businesses raise capital. Small companies had argued that getting a securities registration from every state tied them up, delayed the money-raising process, and often made it impossible to proceed.
Under Regulation A+, a company would only need an SEC registration. In exchange for forgoing state approval, Tier 2 companies have to ensure certain investor protections, including filing audited financial statements and filing annual, semiannual, and current event reports with the SEC. Tier 1 companies won’t have to file audited reports but are limited to raising up to $20 million in a single year.