SEC VERIFY DATA
TITLE: What Is Regulation A Tier 1 vs Tier 2 Explained
SEO DESCRIPTION: Learn how SEC Regulation A works, including Tier 1 and Tier 2 offering limits, Form 1-A, investor rules and how Regulation A differs from Regulation D.
WHAT IS REGULATION A
Regulation A is an exemption from full Securities Act registration that allows eligible companies to offer securities to the public through a process that is less extensive than a traditional registered public offering.
Because Regulation A offerings can be marketed to the general public, the framework is sometimes described as a “mini-IPO.” However, Regulation A is still an exempt offering structure and should not be confused with a conventional IPO.
TIER 1 VS TIER 2
Regulation A has two offering tiers.
Tier 1 allows eligible companies to raise up to $20 million during a 12-month period. Tier 2 allows offerings of up to $75 million during a 12-month period.
Companies raising $20 million or less may generally choose between Tier 1 and Tier 2, but the two tiers have different compliance requirements.
FORM 1-A
Companies using Regulation A generally file an offering statement on Form 1-A with the SEC. Form 1-A includes information about the issuer, offering terms, business operations, management, risk factors and financial statements.
The SEC must qualify the offering statement before sales can generally begin.
TIER 2 REQUIREMENTS
Tier 2 issuers face additional requirements, including audited financial statements and ongoing SEC reporting.
Non-accredited investors in certain Tier 2 offerings may also be subject to investment limits. For individuals, the limit is generally based on 10% of the greater of annual income or net worth, subject to applicable exceptions.
Tier 2 offerings also generally benefit from federal preemption of state securities registration requirements, although state antifraud authority still applies.
REGULATION A VS REGULATION D
Regulation A can permit public participation and broad marketing, while Regulation D offerings often rely on private-placement exemptions such as Rule 506(b) or Rule 506(c).
Regulation A uses Form 1-A, while Regulation D offerings generally use Form D.
WHY REGULATION A MATTERS
When FilingDossier reviews a Regulation A issuer, it may examine Form 1-A filings, offering circulars, financial statements, management disclosures and ongoing reports.
Qualification of a Regulation A offering does not mean the SEC has approved the investment or guaranteed its financial performance.
DISCLAIMER
FilingDossier is an independent research platform and is not affiliated with or endorsed by the SEC. This material is provided for informational and research purposes only and does not constitute legal or investment advice.