Final Rules
In the final rules, and consistent with the views of many commenters,717 we are simplifying Exchange Act registration in connection with Regulation A offerings conducted pursuant to Tier 2 so that issuers wishing to register a class of Regulation A securities under the Exchange Act may do so by filing a Form 8-A in conjunction with the qualification of a Form 1-A. Only issuers that follow Part I of Form S-1 or the
Form S-11 disclosure model in the offering circular will be permitted to use Form 8-A.718
An issuer registering a class of securities under the Exchange Act concurrently with the qualification of a Regulation A offering statement will become an Exchange Act reporting company upon effectiveness of the Form 8-A and, if applicable, its obligation to file ongoing reports under Regulation A will be suspended for the duration of the resulting reporting obligation under Section 13 of the Exchange Act.719 While some commenters suggested that we permit issuers to rely on the Form 8-A to register a class of securities for up to 12 months following the qualification of an offering statement, we believe limiting short form registration to situations in which an offering statement is being concurrently qualified will help ensure that the disclosures incorporated by reference into the Form 8-A, including financial statements contained in the offering statement are current.720 The final rules would not, however, prevent an issuer from
717 See fn. 706 above.
718 See Form 8-A, General Instructions A(c).
719 As discussed more fully in in Section II.E.4. below, a Tier 2 issuer may terminate its Regulation A ongoing disclosure obligation when it is no longer subject to the ongoing reporting requirements of Section 13 of the Exchange Act. See also Rule 257(e).
720 In order to ensure that registration on Form 8-A is limited to a concurrently qualified Regulation A offering statement, the amendments to Form 8-A expressly limit the use of the form to instances where the filing of the Form 8-A and, where applicable, the receipt by the Commission of
registering a class of securities under the Exchange Act on Form 8-A concurrent with the re-qualification of a previously qualified offering statement.
We recognize that Exchange Act reporting requires more comprehensive ongoing reporting than the Regulation A disclosure regime, which is why facilitating issuers’ entrance into the Exchange Act reporting system on Form 8-A concurrent with the qualification of a Regulation A offering statement will benefit investors. At a minimum, issuers pursuing this route to exchange listing must meet listing standards of, and be certified by, the exchange before the Form 8-A will be declared effective. In order to be approved for listing on an exchange, issuers generally must meet certain size, financial,
minimum securities distribution (or liquidity), and corporate governance criteria.721
Additionally, in order to maintain listing on an exchange, issuers must maintain certain qualitative and quantitative continued listing standards.722 Therefore, in addition to the provision of ongoing Exchange Act reports, investors will benefit from the issuer’s satisfaction of the exchange’s initial and ongoing listing standards, and may benefit from greater liquidity for their shares as a result.
As suggested by commenters, we believe that our accommodation should be limited to instances where an issuer provides disclosure in Part II of Form 1-A that follows Part I of Form S-1 or Form S-11, instead of the Offering Circular format. While
certification from the national securities exchange listed on the form occur within five calendar days after the qualification of the Regulation A offering statement.
721 See, e.g., Initial Listing Guide for the NASDQAQ Stock Market, available at: https://listingcenter.nasdaq.com/assets/initialguide.pdf; U.S. Listing Standards for the New York Stock Exchange (NYSE), available at: https://www.nyse.com/publicdocs/nyse/listing/NYSE%20_Initial_Listing_Standards_Summary.pd f.
722 See, e.g., Continued Listing Guide for the NASDQAQ Stock Market, available at: https://listingcenter.nasdaq.com/assets/continuedguide.pdf; Continued Listing Standards for the New York Stock Exchange (NYSE), available at: https://www.nyse.com/get-started/reference.
all formats require extensive disclosure that, with the exception of item numbering, is similar in many respects, we believe that an issuer entering Exchange Act reporting should provide disclosure in a manner that is generally consistent with the requirements of issuers entering the Exchange Act reporting regime through registered offerings.723 In this regard, we note that issuers qualifying an offering statement that follows Part I of Form S-1 or Form S-11 will, however, be required to follow the financial statement requirements of Part F/S of Form 1-A. For purposes of concurrent Exchange Act registration, the financial statements included in Form 1-A must be audited in accordance with the standards of the PCAOB by a PCAOB-registered auditor that is independent pursuant to Article 2 of Regulation S-X.724 After effectiveness of the Form 8-A, they will be subject to Exchange Act reporting and compliance with the financial statement requirements of Exchange Act reporting companies.
Consistent with the suggestion of commenters,725 we agree that issuers entering Exchange Act reporting under a qualified Regulation A offering statement and Form 8-A will be considered “emerging growth companies” to the extent the issuers otherwise qualify for such status. Issuers should base status determinations on the definition of an emerging growth company as it appears in the Securities Act and the Exchange Act.726
As noted above, the Proposing Release sought comment on whether we should consider encouraging the development of venture exchanges or other trading venues to
723 See Section II.C.3.b(2)(c). above for a description of the financial statement requirements.
724 See General Instruction A.(a) to Form 8-A.
725 ABA BLS Letter; MoFo Letter.
726 Under Section 2(a)(19) of the Securities Act, an “emerging growth company” is defined as, among other things, an issuer that had total annual gross revenues of less than $1 billion during its most recently completed fiscal year. 15 U.S.C. 77b(a)(19). See also Section 3(a)(80) of the Exchange Act (which repeats the same definition). 15 U.S.C. 78c(a)(80).
facilitate the secondary market trading of Regulation A securities. We are considering venture exchanges as a way to provide liquidity for smaller issuers, and are contemplating their use for Regulation A securities as part of that consideration.