Regulation A+ offerings let a company raise up to $75 million from the general public in a rolling 12-month period without conducting a traditional IPO. Created by the JOBS Act as a modernized version of the original Regulation A exemption, it opens investment to both accredited and non-accredited investors, which makes it one of the few federal exemptions that lets ordinary people buy into early-stage and growth companies. In exchange, the issuer accepts SEC review, disclosure obligations, and, at the higher tier, audited financials and ongoing reporting.
Tier 1 and Tier 2
Every Regulation A+ offering falls into one of two tiers, and the choice drives almost everything else. Tier 1 caps the total raise at $20 million over 12 months, with no more than $6 million of that coming from affiliated selling shareholders. Tier 2 allows up to $75 million over the same window, with an affiliate cap of $22.5 million.1eCFR. 17 CFR 230.251
The dollar ceiling isn’t the only difference. Tier 1 issuers must comply with state “blue sky” laws in every state where they plan to sell securities, which means registering with each state regulator, working through separate review processes, and paying filing fees in each jurisdiction. Tier 2 issuers skip that entirely because Congress designated Tier 2 securities as “covered securities” under Section 18 of the Securities Act, preempting state registration.2Office of the Law Revision Counsel. 15 U.S. Code 77r – Exemption From State Regulation of Securities In return, Tier 2 requires audited financial statements and ongoing SEC reporting. Tier 1 avoids both.
Investment Limits for Non-Accredited Investors
Tier 2 imposes a cap on non-accredited individual investors when the securities won’t be listed on a national exchange after qualification. In that situation, a non-accredited investor cannot purchase more than 10% of the greater of their annual income or net worth.1eCFR. 17 CFR 230.251 The “greater of” language matters: someone earning $60,000 with a net worth of $100,000 could invest up to $10,000, not $6,000. Accredited investors face no such cap. Tier 1 has no federal investment limits for any investor, though states may impose their own through blue sky review.
Who Can Use Regulation A+
The issuer must be organized under the laws of the United States or Canada and have its principal place of business in one of those two countries.1eCFR. 17 CFR 230.251 Several categories are then excluded outright:
- Investment companies and business development companies registered or required to register under the Investment Company Act of 1940.
- Blank check companies with no specific business plan, or whose stated purpose is to merge with or acquire an unidentified company.
- Issuers of oil, gas, or other mineral fractional interests.
- Companies subject to an SEC suspension order entered under Section 12(j) of the Exchange Act within the previous five years.
- Companies behind on required filings under Regulation A or the Exchange Act for the two years before the new offering statement.
The last item catches some companies off guard. A business that previously ran a Tier 2 offering and fell behind on its annual or semiannual reports cannot file a new offering statement until those delinquent filings are current.1eCFR. 17 CFR 230.251
Bad Actor Disqualification
Rule 262 bars a company from using Regulation A+ if the issuer or its “covered persons” have certain legal history. Covered persons include directors, officers, underwriters, promoters currently connected with the offering, anyone owning 20% or more of the issuer’s voting equity, and, for fund-issuers, investment managers and general partners.
Lookback periods vary. Criminal convictions tied to securities fraud, false SEC filings, or operating as a broker-dealer or investment adviser trigger a 10-year disqualification for most covered persons, shrinking to five years for the issuer and its predecessors. Court orders restraining someone from securities-related activity carry a five-year lookback. Final orders from state regulators or federal banking agencies barring someone from the securities or banking business disqualify the issuer if entered within 10 years.3eCFR. 17 CFR 230.262
Running background checks on every covered person early is worth the effort. Discovering a disqualifying event after months of SEC filings is an expensive lesson.
Testing the Waters Before Filing
One of the more practical features of Regulation A+ is the ability to gauge investor interest before spending on a full offering. Under Rule 255, a company can distribute written or oral solicitation materials at any point, including before filing the offering statement with the SEC.4eCFR. 17 CFR 230.255
The rules on those communications are specific. Every solicitation must clearly state that no money is being accepted, that no binding commitments can be made, and that no offer can be accepted until the SEC qualifies the offering statement. Once the offering statement is publicly filed, the materials must also tell recipients where to find the preliminary offering circular.4eCFR. 17 CFR 230.255 These communications count as offers under the antifraud provisions of the securities laws, so misleading claims during testing can create real liability. Any solicitation materials used have to be filed as exhibits to the offering statement.
Form 1-A and the Qualification Process
The offering statement is Form 1-A, filed electronically through the SEC’s EDGAR system. It contains identifying information about the issuer, an offering circular describing the business, use of proceeds, risk factors, executive compensation, and financial condition, and a set of exhibits.5U.S. Securities and Exchange Commission. Form 1-A – Regulation A Offering Statement
The financial statement requirements are where the tiers diverge sharply. Tier 1 issuers must include balance sheets, income statements, and cash flow statements for the two most recent fiscal years, but these do not need to be audited unless the company already obtained an audit meeting the applicable professional standards. Unaudited statements must be clearly labeled. Tier 2 issuers must provide two years of audited financial statements prepared under U.S. Generally Accepted Accounting Principles, with the audit conducted under either AICPA or PCAOB standards.5U.S. Securities and Exchange Commission. Form 1-A – Regulation A Offering Statement For companies that have never been audited, the audit alone can add $50,000 or more and several months to the timeline.
After filing, SEC staff review the offering statement for completeness and issue a comment letter, typically within about 30 days of the initial filing. The issuer amends Form 1-A on EDGAR to respond, and the back-and-forth continues until staff are satisfied. Two or three rounds of comments is common. The process ends with a Notice of Qualification, which authorizes the company to begin selling securities. No sales can occur, and no investor funds can be accepted, before that date.
Ongoing Reporting After Qualification
Tier 2 issuers take on ongoing reporting obligations that resemble, in miniature, what fully public companies file. Tier 1 issuers have almost no federal reporting burden beyond an exit report when the offering ends.
Tier 2 Annual, Semiannual, and Current Reports
Annual reports on Form 1-K are due within 120 calendar days after the end of the fiscal year and include audited financials plus a management discussion of results.6U.S. Securities and Exchange Commission. Form 1-K Annual Report Semiannual reports on Form 1-SA cover the first six months of the fiscal year and are due within 90 calendar days of the period end; the financials in a 1-SA can be unaudited.7eCFR. 17 CFR 230.257
Current reports on Form 1-U are triggered by specific events, including a change in control, departure of the CEO or other principal officers, bankruptcy, or material asset acquisitions. Falling behind on any of these filings brings administrative penalties and blocks the company from future Regulation A+ offerings.
Tier 1 Exit Report
Tier 1 issuers file a brief exit report on Form 1-Z within 30 calendar days after the offering terminates or is completed.7eCFR. 17 CFR 230.257 That is the extent of the federal reporting obligation, though state reporting rules may still apply.
Resale and Liquidity
Securities purchased by non-affiliates in a Regulation A+ offering are freely tradable immediately upon issuance. That is a meaningful advantage over Regulation D private placements, where securities are restricted and buyers typically face a one-year holding period. Free tradability means a Regulation A+ issuer can list on an exchange or the OTC markets and its investors can buy and sell right away, creating at least the possibility of a liquid secondary market. Securities held by insiders and affiliates remain subject to resale limitations, which is why the offering itself caps affiliate participation at $6 million for Tier 1 and $22.5 million for Tier 2.
How Regulation A+ Compares to Regulation D and Regulation Crowdfunding
Companies weighing Regulation A+ usually compare it to Regulation D and Regulation Crowdfunding. Each fits a different situation.
- Regulation D, Rules 506(b) and 506(c): no cap on the amount raised, but generally limited to accredited investors. Rule 506(b) allows up to 35 non-accredited investors and prohibits general solicitation; Rule 506(c) permits advertising but requires verification that every purchaser is accredited. Securities are restricted. Best for raises from institutional or high-net-worth investors who don’t need liquidity.
- Regulation Crowdfunding: caps the raise at $5 million over 12 months, open to accredited and non-accredited investors with individual investment limits based on income and net worth, and must be conducted through a registered funding portal. Securities carry a one-year resale restriction. Best for smaller raises with a broad, engaged investor base.
- Regulation A+ Tier 2: up to $75 million, open to all investors, freely tradable securities, and state registration preempted, in exchange for audited financials and ongoing SEC reporting.
The decision usually turns on how much capital the company needs, whether it wants non-accredited investors, and how much secondary-market liquidity matters. Companies raising under $5 million from a broad base of small investors are often better served by Reg CF. Companies raising large sums from a small group of wealthy investors typically lean toward Reg D. Regulation A+ fills the middle: meaningful capital, broad investor access, and tradable securities, in exchange for real regulatory overhead.
What a Regulation A+ Offering Costs
Total cost surprises many first-time issuers. Legal fees for preparing and filing Form 1-A, responding to SEC comments, and advising on state compliance commonly run into six figures. The two-year audit required for Tier 2 adds another substantial expense, particularly for companies that have never undergone a GAAP-compliant audit. Marketing is often the largest single line item: because Regulation A+ allows general solicitation, most issuers invest heavily in digital advertising, landing pages, and investor relations platforms to reach retail investors.
Beyond professional fees, companies listing on the OTC markets or a national exchange face registration fees and ongoing annual charges. EDGAR itself has no filing fee for Form 1-A, but broker-dealer relationships, transfer agent services, and DTCC eligibility processing add up quickly. A Tier 2 offering raising $10 million to $30 million often costs $300,000 to $500,000 or more before the first dollar is raised, with marketing expenses on top. Budgeting realistically, and factoring these costs into the target raise, keeps a company from running short partway through.