Reg A and Reg D: Evolving Securities Exemptions for Private Placement Offerings

Navigating Regulation A+, the FAST ACT, Rule 506(c), and Accredited Investors; Recent SEC Guidance and the HALOS Act

Recording of a 90-minute CLE webinar with Q&A


Conducted on Tuesday, May 16, 2017

Recorded event now available

Program Materials

This CLE webinar will provide private equity and securities counsel with an update on the current status of Reg A and Reg D, including an analysis of SEC compliance and disclosure interpretations (CDIs) released since the JOBS Act, the FAST Act and accompanying SEC rules went into effect. The panel will also discuss the HALOS Act and other revisions to Reg A and Reg D anticipated under the new administration.

Description

Over the last two years, Congress and the SEC created or expanded several exemptions from federal registrations of securities offerings. These changes provide new opportunities for capital raising for private equity funds and their portfolio companies, without the expense of federal, and in some cases state, registration of securities offerings.

Regulation A+ exempts from registration a securities offering of up to $50 million to a broad base of accredited and unaccredited investors alike. It provides for two tiers of offerings: Tier 1 for offerings up to $20 million and Tier 2 for up to $50 million. Counsel should understand the reporting requirements and state law preemption associated with each.

The FAST Act codified the current practice of private resales by affiliates of issuers without registration, giving greater certainty of exemption to certain sellers. But the issuer must comply with several conditions with regard to the accredited investors, the issuer and class of securities sold to qualify for the exemption.

Since 2013, Rule 506(c) under Regulation D permits general solicitations to accredited investors, but issuers must confirm accredited investor status. Issuers have usually opted for Rule 506(b), which does not allow for general solicitations but allows for self-certification by accredited investors.

Reg A and Reg D continue to evolve. The SEC Division of Corporate Finance recently provided three new CDIs on Reg A regarding post-qualification amendments, calculation of the change in price in an offering, and required financial statements. It also provided some clarity on when a Rule 506(b) offering is or is not deemed integrated into a successive Rule 506(c) offering.

The HALOS Act, passed by the House in Feb. 2017 and pending in the Senate, would further amend Rule 506 to provide that “general solicitation” does not include presentations to angel investors. There is continuing discussion by regulators of how “accredited investor” should be defined.

Listen as our authoritative panel analyzes the current exemptions available under Regulations A and D, and the conditions attached to each. The panel will also discuss recent SEC CDIs and their impact in Reg A and Reg D, as well as proposed rules and legislation which are likely to affect these offering exemptions going forward.

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Outline

  1. Introduction—Reg A and Reg D exemptions
  2. Regulation A+
    1. Tier 1 and Tier 2
    2. State law preemption
  3. FAST Act and the private resale of securities—exemption requirements
  4. Rule 506(b) and 506 (c)—different approaches to verifyng “accredited investors”
  5. Recent SEC compliance and disclosure interpretations
    1. Regulation A—post-qualification amendments, calculation of the change in price in an offering, required financial statements
    2. Regulation D—integration of 506(b) into 506(c) offering for purposes of accredited investor verification
  6. HALOS Act and other proposed changes to Reg A and Reg D

Benefits

The panel will review these and other key issues:

  • What are the different reporting obligations in Tier 1 and Tier offerings under Reg A+?
  • What are the conditions imposed under the FAST Act rules to allow for private resales without registration?
  • How have recent CDIs impacted post-qualification amendments under Reg A?
  • How have CDIs impacted Reg D generally, and what further exemptions would come from the HALOS Act?
  • What recommendations has the SEC made regarding revisions to the accredited investor definition?

Faculty

McMahon, Arthur
Arthur McMahon, III

Partner
Taft Stettinius & Hollister

Mr. McMahon advises boards of directors and senior management of public companies on corporate governance and...  |  Read More

Hoffman, Bridget
Bridget C. Hoffman

Partner
Taft Stettinius & Hollister

Ms. Hoffman's work includes assistance with clients’ preparation of proxy statements and periodic reports...  |  Read More

Brandi N. Weekley
Brandi N. Weekley

Atty
Taft Stettinius & Hollister

Ms. Weekley's practice primarily focuses on the representation of emerging growth companies and venture capital...  |  Read More