Newly adopted exemption to securities registration requirements may offer new capital raising opportunities for developing companies
A company that seeks to raise capital by offering or selling
securities to potential investors must either register the offer or
sale of securities with the SEC or rely on an exemption to
registrations. Because the registration process is often cost
prohibitive, companies generally rely on an exemption to
registration when raising capital. Before the adoption of the
recent rules and amendments, only offerings up to $5 million could
be exempted under Regulation A. Under Regulation A, issuers had a
limited ability to resell the securities within 12 months after the
offering and the ability to generally solicit offers from investors
who are both accredited and non-accredited. However, the number of
issuers using the Regulation A exemption has declined steadily
since 1997.1 Instead, many issuers have opted to
take advantage of the Regulation
