I’m attorney Laura Anthony founding partner
of Legal & Compliance, a full service corporate, securities, and business transactions law
firm. Today is the final in a LawCast series talking
about Regulation A. Exchange Act Section 12(g) requires that an issuer with total assets
exceeding 10 million dollars and a class of equity securities held of record by either
2,000 persons or 500 persons who are not accredited, register with the SEC, generally on Form 10,
and thereafter be subject to the reporting requirements of the Exchange Act. Regulation A exempts securities in a Tier
2 offering from the Section 12(g) registration requirements if the company meets all of the
following conditions: the company utilizes an SEC-registered transfer agent; the company
remains subject to the Tier 2 reporting obligations; the company is current in its Tier 2 reporting
obligations, including the filing of any annual and semiannual report; and
the company has a public float of less than $75 million as of the last day of its most
recently completed semiannual period or, if no public float, had annual revenues of less
than $50 million as of its most recently completed fiscal year-end. Moreover, even if a Tier 2 issuer is not eligible
for the Section 12(g) registration exemption, that issuer will have a two-year transition
period prior to being required to register under the Exchange Act, as long as during
that two-year period, the company continues to file all of its ongoing Regulation A reports
in a timely manner with the SEC. As I’ve touched on in this LawCast series,
Tier I offerings do not pre-empt state law and remain subject to state blue sky qualification. This process is expensive and time consuming. The NASAA offers a coordinated review program
which can be helpful, but a company must still comply with each state’s differing requirements
and interpretations. Tier 2 offerings are not subject to state
blue sky law or state review or qualification – i.e., state law is pre-empted. State securities registration and exemption
requirements are only pre-empted as to the Tier 2 offering and securities purchased pursuant
to the qualified Tier 2 for 1-A offering circular. Subsequent resales of such securities are
not pre-empted. Also, pre-emption does not extend to broker
dealer registration requirements. Five states do not have an issuer broker dealer
exemption for public offerings such as a Regulation A offering. Those states are Florida, Texas, Arizona,
New York and North Dakota. Also, Alabama and Nevada require that officers
and directors that sell securities on behalf of a company, register as an agent. Both Tier 1 and Tier 2 offerings remain subject
to state antifraud provisions, and states may require certain notice filings. In addition, states maintain the authority
to investigate and prosecute fraudulent securities transactions. I am securities attorney Laura Anthony, founding
partner of Legal & Compliance, and producer of LawCast. Should you have any questions about today’s
topic, please visit SecuritiesLawBlog.com and LawCast.com, or contact me directly. Inquiries of a technical nature are always

Tagged : # # # # #

Leave a Reply

Your email address will not be published. Required fields are marked *