SEC Permits SEC Reporting Companies to Use Reg A for Offerings

The SEC has just issued final rules to permit current SEC reporting companies to use Reg A to conduct offerings (link –

This “fixes” a perceived gap in the rules created when the Reg A rules were revised a few years ago.

Permitting SEC reporting companies to use Reg A has benefits:

1. This change enables those companies to take advantage of the streamlined Reg A offering statement and SEC review.

2. Using Reg A offering rules enables issuers to “test the waters” of investor interest and broaden the marketing effort by reaching out directly to potentially interested investors.

Some benefits may not be as valuable, for example, a company using a Reg A offering may avail itself of the lighter SEC reporting requirements. While this would seem to be a boon to companies to save costs, Boustead has found that investors generally prefer companies which are trading on NASDAQ or one of the exchanges, which require conventional (more frequent) SEC reporting anyway.

Also, not all reporting companies may choose to use Reg A for offerings. For example, companies which are able to use SEC’s S-3 registration, which permits incorporation by reference to other SEC filings, may choose to continue to benefit from that feature and decline the opportunity to use Reg A.

We believe this change is a positive step in reducing unintended “gaps” and is likely to benefit a number of companies.

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Opinions expressed in these posts and pages are mine and do not represent the opinion of Boustead USA LLC.