New SEC rules assist small businesses’ capital access

A longtime exemption for small issuers of securities is expanded.

New rules adopted by the SEC are designed to make it easier for smaller companies to gain access to capital.

The rules, which are mandated by the Jumpstart Our Business Startups (JOBS) Act, P.L. 112-106, will enable smaller companies to offer and sell up to $50 million in securities in a 12-month period, providing that eligibility, disclosure, and reporting requirements are met.

The rules update and expand Regulation A, an existing exemption from registration for smaller issuers of securities that has been available for small companies since 1936. Two tiers of offerings are provided for under the rules:

• Tier 1: For offerings of securities of up to $20 million in a 12-month period, with not more than $6 million in offers by selling security holders that are affiliates of the issuer.

• Tier 2: For offerings of up to $50 million in a 12-month period, with not more than $15 million in offers by selling security holders that are affiliates of the issuer.

The rules will take effect 60 days after they are published in the Federal Register. The rules are a response to a significant drop in the number of Regulation A offerings used by smaller companies over the years.

SPONSORED WHITE PAPER

Preparing the statement of cash flows

This instructive white paper outlines common pitfalls in the preparation of the statement of cash flows, resources to minimize these risks, and four critical skills your staff will need as you approach necessary changes to the process.

RESOURCES

Keeping you informed and prepared amid the COVID-19 crisis

We’re gathering the latest news stories along with relevant columns, tips, podcasts, and videos on this page, along with curated items from our archives to help with uncertainty and disruption.