Securities and Exchange Proposes to Relax Limits on Private Offerings

Securities and Exchange Proposes to Relax Limits on Private Offerings

     On March 4, the SEC released a (341 page long) proposal setting forth certain possible changes to the rules governing private offerings with the aim to make two of those forms, namely RegulationA+ and Crowdfunding, more available. 

     With respect to RegulationA+ offerings, the maximum size would be increased from $50 million to $75 million. RegulationA+ offerings are themselves in the nature of a small public offering, but they entail fewer disclosure obligations. That said, the increase to $75 million offerings would be restricted to “Tier 2” companies, and they are required to include audited financial statements in their RegulationA documentation. At the same time, the upper limit for Tier 1 RegulationA+ offerings would be increased from $15 million to $22.5 million.

     With respect to Crowdfunding, which has overall seen relatively little utilization, the maximum amount that could be raised would be increased from $1.07 million to $5 million. Also, the limit in any individual investor could devote to crowdfunding offerings would be increased.

     In another proposal in the release would allow companies to engage in further communications efforts with prospective investors before deciding upon which private offering approach they would utilize.