On September 5, 2017 the U.S. House of Representatives passed the Improving Access to Capital Act 1 (the “Act”). This Act directs the SEC to amend and expand the availability of Regulation A+ to SEC reporting companies.
Regulation A+ was introduced under Title IV of the Jumpstart Our Business Startup Act (“JOBS Act”) with the goal of increasing access to the capital markets for smaller issuers. Under the JOBS Act Regulation A+ created two tiers of offerings:
- Tier 1: offerings of up to $20 million in a 12-month period, including not more than $6 million in offers by selling securityholders that are affiliates of the issuer; and
- Tier 2: offerings of up to $50 million in a 12-month period, including not more than $15 million in offers by selling securityholders that are affiliates of the issuer.
In order to use Regulation A+ as a capital raising tool, as introduced under the JOBS Act, an issuer must be organized and operating in the United States or Canada and cannot be an SEC reporting company. The Act would not change the requirement to be a United States or Canadian company, but would allow greater access to capital for smaller SEC reporting companies.
The Act also directs the SEC to revise the JOBS Act reporting regime for issuers registering a Tier 2 offering. Specifically, the Act would allow the current and periodic reports filed by an SEC reporting issuer to satisfy the Regulation A+ reporting requirements; provided that such issuer meets its Section 13 reporting obligations under the U.S. Securities Exchange Act of 1934, as amended.
The bill must now be heard and passed by the U.S. Senate before it becomes law. If the Act becomes law it would allow smaller SEC reporting companies greater access to capital, particularly those U.S. domestic and foreign private issuers that do not currently qualify to use Form S-3 or Form F-3 for primary offerings.
If you have questions regarding the Improving Access to Capital Act and how it may benefit your company, please contact Daniel D. Nauth at 416-477-6031 or firstname.lastname@example.org.
1 The full text of the Improving Access to Capital Act can be found here.