SEC Adopts New Rules to Facilitate Capital Raising by Private Companies

SEC Adopts New Rules to Facilitate Capital Raising by Private Companies

The Securities and Exchange Commission (“SEC”) adopted final rules amending Regulation A (“Regulation A+”) under the Securities Act of 1933, as mandated by the Jumpstart Our Business Startups Act.

The new rules, according to a Womble Carlyle article, which are part of the government’s efforts to give private companies greater access to capital, will expand and modernize existing Regulation A by providing new registration exemptions for privately-held companies making securities offerings of $50 million or less within a 12-month period.

The new rules provide for two tiers of offerings:

  • Tier 1 offerings may raise up to $20 million of securities in a 12-month period
  • Tier 2 offerings may raise up to $50 million of securities in a 12-month period

Companies issuing up to $20 million of securities may choose whether to proceed under Tier 1 or Tier 2.

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