Resource Guide: SEC Regulation A + Plus

We appreciate that requiring EDGAR filing will impose some new costs on issuers, as addressed more fully in the Economic Analysis section of the release.239 We do not, however, believe that the incremental cost associated with the EDGAR filing

237 Investors would not, however, have immediate access to non-public submissions of draft offering statements. See discussion in Section II.C.2. below.
238 The specific disclosure requirements included in the XML-based fillable form are discussed more fully in Section II.C.3.a. below.
239 See Section III. below. requirements justifies maintaining a paper-only filing requirement. On the contrary, we believe that the potential additional cost to issuers associated with the EDGAR filing requirement should be minimal and electronic filing on EDGAR would eliminate any processing delays and costs otherwise associated with the current paper filing system, such as printing or mailing costs.
Delivery Requirements

We are adopting, as proposed, an access equals delivery model for Regulation A final offering circulars when sales are made on the basis of offers conducted during the prequalification period and the final offering circular is filed and available on EDGAR. The expanded use of the Internet and continuing technological developments suggest that we should update the final offering circular delivery method for Regulation A in a manner that is consistent with similar updates to delivery requirements for registered offerings.240 Contrary to the views of some commenters,241 we do not believe that access to EDGAR generally has proven to be a challenge for investors in registered offerings since the adoption of the Securities Offering Reform Release in 2005. We also do not believe that it will be a challenge for investors under Regulation A or raise investor protection concerns, particularly in light of our final delivery requirements (including, where applicable, the inclusion of hyperlinks to offering materials on EDGAR that must be provided to investors by issuers and intermediaries).242 Therefore, where sales of Regulation A securities occur after qualification on the basis of offers made using a preliminary offering circular, issuers and intermediaries can presume that investors have
240 See Securities Offering Reform, Rel. No. 33-8591.
241 See fn. 228 above.
242 See Rule 251(d)(2), Rule 254(a), and Rule 255(b) and (d).
access to the Internet and may satisfy their delivery requirements for the final offering circular by filing it on EDGAR.243 Issuers are, however, required to include a notice in any preliminary offering circular that will inform potential investors that the issuer may satisfy its delivery obligations for the final offering circular electronically.244
Further, as proposed, “electronic-only” offerings of Regulation A securities will be permitted under the final rules, provided that issuers and intermediaries comply with relevant Commission guidance.245 Specifically, in such offerings, an issuer and its participating intermediaries must obtain the consent of investors to, or otherwise be able to evidence the receipt of, the electronic delivery of:
the preliminary offering circular and information other than the final offering circular, in instances where the issuer sells Regulation A securities based on offers made using a preliminary offering circular; and
all documents and information, including the final offering circular, when the issuer sells Regulation A securities based on offers made during the
post-qualification period using a final offering circular.

As we noted in the Proposing Release, in light of the proposed requirements for electronic delivery and in order to be consistent with requirements for registered offerings, we believe it appropriate to permit dealers, during the aftermarket delivery

243 Cf. Rel. No. 33-8591, at 244.
244 See Rule 254(a).
245 An electronic-only offering is an offering in which investors are permitted to participate only if they agree to accept the electronic delivery of all documents and other information in connection with the offering. See Rel. No. 34-37182 (May 9, 1996) [61 FR 24644] (Use of Electronic Media by Broker-Dealers, Transfer Agents and Investment Advisers for Delivery of Information), Rel. No. 34-42728 (Apr. 28, 2000) [65 FR 25843] (Use of Electronic Media), and Rel. No. 33-7233 (Oct. 6, 1995) [60 FR 53458] (Use of Electronic Media for Delivery Purposes).
period, to be deemed to satisfy their final offering circular delivery requirements if such document is filed and available on EDGAR.246 We are amending Rule 251(d)(2)(ii) of existing Regulation A to make clear that dealers, like issuers and intermediaries, can also rely on the provisions for access equals delivery.247 Additionally, the amendment clarifies that a dealer can rely on access equals delivery for a final offering circular provided it complies with the requirements of Rule 251(d)(2)(ii). This clarifying amendment is necessary to avoid any confusion that the final rules could be read to impose a double delivery requirement on dealers during the aftermarket delivery period. Separately, we are modifying the terms of Rule 251(d)(2)(ii) to make it more consistent with the dealer delivery requirements for registered offerings under Securities Act Rule 174.248 As proposed, the rules would have required dealers in all circumstances to deliver a copy of the current offering circular to purchasers for sales that take place within 90 calendar days after qualification.249 Consistent with the suggestion of one
commenter,250 we are revising the proposed rules to more closely align the Regulation A delivery requirements with those required in Securities Act Rules 174(b) and (d).251 We, therefore, are adopting the proposed 90 calendar day dealer delivery requirement, but eliminating the dealer delivery requirement when the issuer is subject immediately prior
246 See Proposing Release, at Section II.C.1.
247 See Rule 251(d)(2)(ii). Notwithstanding the final delivery requirements, broker-dealers remain subject to the anti-fraud provisions of Section 15 of the Exchange Act.
248 While we have made clarifying revisions to proposed Rule 251(d)(2)(iii) and renumbered it as Rule 251(d)(2)(ii), the final rule is consistent with Rule 174, as there is no need for an analog to Rule 174(g), which covers the dealer delivery obligations in registered offerings by blank check companies under Rule 174(g). Blank check companies are ineligible issuers under Regulation A. See Rule 251(b).
249 See proposed Rule 251(d)(2)(iii).
250 Paul Hastings Letter.
251 See 17 CFR 230.174(b), (d).
to filing the offering statement to Tier 2 ongoing reporting252 and reducing the length of the delivery requirement to 25 calendar days after the later of the qualification date of the offering statement or the first bona fide offering of securities if the securities will be listed on a national securities exchange.253 As adopted, the final rules reduce dealer aftermarket delivery requirements, which should aid dealers in compliance with the final rules.
The final rules also update and amend Rule 251(d)(2)(i) to align with changes in the prospectus delivery requirements for registered offerings that have occurred since these requirements were last updated in Regulation A.254 We believe the delivery of the preliminary offering circular to potential investors before they make an investment decision on the basis of information provided during the prequalification period remains an important investor protection that the final rules should preserve, particularly in light of the proposed expanded use of “testing the waters” solicitation materials to include the period of time after non-public submission or filing of the offering statement, as discussed further in Section II.D. below.255 We also recognize that updating and amending Regulation A’s offering circular delivery requirements will likely benefit market participants by minimizing discrepancies between the requirements of broker- dealers in Regulation A and registered offerings.