In what proposes to be a big change in private placements, the Securities and Exchange Commission issued a set of proposed amendments that “provide a more rational framework, eliminate complexity and increase access to capital while preserving and enhancing important investor protections.”
Offering and Investment Limits. The Commission proposed revisions to the current offering and investment limits for certain exemptions.
For Regulation A:
– raise the maximum offering amount under Tier 2 of Regulation A from $50 million to $75 million; and
– raise the maximum offering amount for secondary sales under Tier 2 of Regulation A from $15 million to $22.5 million.
For Regulation Crowdfunding:
– raise the offering limit in Regulation Crowdfunding from $1.07 million to $5 million;
– amend the investment limits for investors in Regulation Crowdfunding offerings by: not applying any investment limits to accredited investors; and revising the calculation method for investment limits for non-accredited investors to allow them to rely on the greater of their annual income or net worth when calculating the limit on how much they can invest.
For Rule 504 of Regulation D:
– raise the maximum offering amount from $5 million to $10 million.
Integration:
The current Securities Act integration framework for determining whether multiple securities transactions should be considered part of the same offering is proposed to be revised with four new safe harbor. This would be particularly useful in private fund offerings. One is strict 30-day separation between the offerings.
General Solicitation:
Demo days and similar events would be exempt from “general solicitation” restrictions.
Accredited investor verification:
The amendments would change the financial information that must be provided to non-accredited investors in Rule 506(b) private placements to align with the financial information that issuers must provide to investors in Regulation A offerings.
There would be new items to the non-exclusive list of verification methods in Rule 506(c) public-private placements.
It’s just a proposed rule. You have two months to review and provide comments.
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