Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

The House of Representatives has overwhelmingly approved legislation to expand the pool of issuers who may rely on the SEC’s Regulation A rules for smaller exempt offerings.

The House’s recently approved bill, the Improving Access to Capital Act (H.R. 2864) would direct the SEC to ease certain restrictions on the use of Regulation A. In particular, Rule 251 would be revised to eliminate the prohibition on the use of Regulation A by entities that are subject to the reporting obligations under Section 13 or Section 15(d) prior to an offering. In other words, going forward, use of Regulation A would no longer be restricted to non-reporting issuers.

The Improving Access to Capital Act would also call the SEC to revise Section 251(a)(2) such that any issuer subject to section 13 or 15(d) of the 1934 Act would  be viewed as having met the reporting obligations for Tier II offerings under Section 257(b) of Regulation A provided that such issuer meets their section 13 reporting obligations. This revision would remove the separate periodic and current reporting requirements (i.e. Forms 1-K, 1-SA and 1-U) for smaller offering up to the $50 million threshold.

The newly passed legislation reflects the House’s continuing effort to walk-back regulations implemented during the prior administration; in this instance, removing aspects of the Commission’s recent revamp of Regulation A in March of 2015 (“Regulation A+“)