FEATURE
Be in the Know
Incoming Changes to Federal Securities Exemptions Go Live March 15: 6 Updates to Know By Kevin S. Kim, Esq. and Julia Chang, Esq. of Geraci LLP
T
he framework for securities
Here are the key changes
2. Regulation Crowdfunding limits
offering
to know:
also increased.
1. Regulation A offering and
Regulation
investment limits are increasing.
exemption for startups to access
exemptions
is
undergoing major changes
beginning March 15 that will ideally make
capital
accessible
for
formation small
more
businesses
and entrepreneurs, while retaining protections for investors. The
Securities
and
To
protect
investors,
Regulation
A sets limits on how much can be offered and sold under the exemptions. Offerings are stratified into two tiers based on the offering
Exchange
Commission (SEC) approved the final amendments last November after receiving input from the public on
amount in a 12-month period. The first tier was traditionally capped at $15 million, and the second tier was capped at $50 million.
Crowdfunding
is
an
crowdfunding. It creates guidelines for the transaction process itself, as well as limits on the amount of capital that can be raised, and how much an individual can invest. The most notable change to Regulation Crowdfunding on March 15 is the limit on the amount of capital that can be raised is being increased. The amendment raises the offering limit from $1.07 million to $5 million.
how to streamline what had become
Starting March 15, the maximum Tier
an overly complex process. Geraci
2 Regulation A offering will increase
Law Firm is cited throughout the
to $75 million from $50 million. The
final document regarding the firm’s
amendments also up the maximum
stance on the amendments below.
offering for Tier 2 secondary sales
The amendments include updates
to $22.5 million from $15 million.
to the Integration Rules, Regulation
This was done to encourage greater
A, Regulation CF, and rules on
capital formation and provide more
registration
general solicitation.
investment opportunities.
the integration rules have become
34
3. The Integration Rules were cleaned up and clarified. Integration Rules exist to prevent companies from dividing a single offering into multiple to qualify for exemption from the traditional SEC process.
Over
time,
