Understand the two tiers
Regulation A is an exemption from Securities Act registration, with an SEC qualification process. Tier 1 allows up to $20 million and Tier 2 up to $75 million in a 12-month period. Tier 2 requires audited financial statements and continuing reports, with purchase limits for certain investors. Tier 1 generally brings state-level qualification work; Tier 2 preempts state qualification, but state notice filings and fees may still apply.
Decide whether the economics fit
A larger legal limit does not create demand. Compare the net cash the business needs with the preparation cost, audience-acquisition budget and management time required. Request separate scopes from counsel, accountants, platform providers and marketing firms. Ask what must be paid before qualification, what is contingent on a close, and what continues afterward. Model a delayed launch and a raise substantially below your target.
Build the offering package
Eligible issuers generally include companies organized and principally based in the United States or Canada, subject to exclusions and conditions. Counsel prepares Form 1-A and the offering circular with your business, financial, risk and security information. Accountants prepare the required financial statements. Clean records, documented ownership and clear business evidence reduce avoidable rework; they do not guarantee qualification.
Move through review and launch
Your team files the offering statement, addresses SEC comments and coordinates any applicable state requirements. Testing-the-waters communications have specific conditions and required legends. Do not treat indications of interest as binding purchases. Sales under Reg A must wait for qualification. Confirm how your platform handles subscriptions, investor checks, funds, records and any escrow arrangements for the actual offering.
Budget for life after the offering
Tier 2 issuers generally file annual Form 1-K, semiannual Form 1-SA and current Form 1-U reports for specified events. Build an accounting close and disclosure calendar before launch. Reg A does not automatically put shares on a stock exchange or create liquidity. Public trading, transfer restrictions, market infrastructure and exchange eligibility are separate matters to review.
Put it into practice
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General education, not individualized investment, legal or tax advice. Rules, eligibility and product terms can change. Confirm the requirements for your company with qualified professionals.