It Is Time To Revisit Regulation A

The SEC (U.S. Securities and Exchange Commission) and Congress can provide investors with increased access to emerging companies that historically have raised capital from institutional investors in private markets and can continue to support small business capital formation in the public markets by expanding and modernizing Regulation A. This Goodwin Alert provides a number of ways Regulation A could be improved as a capital-raising tool for US companies to build critical mass.

The SEC adopted Regulation A to facilitate capital raising by smaller companies while still providing important investor protections. In March 2015, the SEC adopted amendments to Regulation A that expanded the Tier 2 Regulation A exemption from the Securities Act of 1933 (the "Securities Act") registration for public offerings up to $50 million in any rolling 12-month period (also known as Regulation A+ or Reg A+), as mandated by Title IV of the Jumpstart Our Business Startups Act. The Tier 2 Regulation A offering limit was raised by the SEC to $75 million in any rolling 12-month period in November 2020. Offerings under Regulation A are subject to reduced disclosure requirements and less onerous ongoing reporting requirements as compared with the full Securities Exchange Act of 1934 (the "Exchange Act") requirements. Regulation A offerings also allow unaccredited investors, subject to certain investment limitations, to access investments that would typically only be available to institutional and accredited investors.

Despite the SEC's attempts to harmonize registration exemptions, eliminate complexity, and facilitate access to public capital markets, the use of Regulation A (both Tier 1 and Tier 2 offerings) as a capital-raising tool remains muted. The amount of capital raised under Regulation A has decreased from its peak based on the data released by the SEC's Division of Economic and Risk Analysis in March 2025.¹ In 2022, there were roughly 307 Regulation A offerings that were qualified by the SEC, and Regulation A issuers raised approximately $1.85 billion as compared with 102 Regulation offerings qualified by the SEC and $896 million raised in 2024. This is compared with approximately $2.15 trillion raised through Regulation D in 2024. Offerings under Regulation D are generally only available to institutional and accredited investors. As the SEC and Congress look to improve retail investor access and support small-business capital formation in the public markets, there are a number of changes that could be made to Regulation A to significantly improve it as a capital-raising tool and truly make it an on-ramp for companies to an eventual listing on a national securities exchange.

Regulation A should be amended to increase the aggregate maximum offering amount in any rolling 12-month period to at least $300 million.

The top reason given by Goodwin clients for not utilizing Regulation A is that the dollar limit is too small given the amount of time and money it would take to launch an offering. Pursuant to Rule 251 of the Securities Act, Tier 2 issuers under Regulation A may raise up to an aggregate of $75 million over any rolling 12-month period through the filing and qualification of an offering statement on Form 1-A. Companies that wish to raise additional capital in excess of this amount in a continuous offering—as capacity becomes available during the rolling 12-month period—are permitted to file a post-qualification amendment ("PQA") rather than file a new offering statement. Whether an issuer utilizes a PQA or opts to file a new offering statement to cover additional securities in excess of $75 million, either filing must then be reviewed and qualified by the SEC prior to the issuer making any subsequent sales in excess of the $75 million cap.

According to the December 19, 2018, SEC Release adopting amendments to Regulation A, the SEC estimated that issuers will expend approximately 731 hours to prepare and file an offering statement on Form 1-A.² Besides the number of hours required, issuers incur substantial monetary costs from outside professionals, including legal and accounting personnel, who are required under Regulation A to provide legal opinions and/or consents related to audited financial statements in each offering statement. Regulation A, in its current form, burdens issuers with significant time and resource constraints when they wish to raise capital, including burdening issuers who are successful in raising capital over the initial $75 million maximum offering amount. By increasing the maximum aggregate offering amount to at least $300 million, the SEC would lessen the burden on issuers by permitting them to raise more capital before requiring such issuers to file PQAs or new offering statements with the SEC and would support companies that are contemplating ramping up to going public. Importantly, this increase would not impact investor protections, and unaccredited investors would still remain subject to investment limitations that restrict any investment to no more than 10% of the greater of their annual income or net worth. Regulation A's "bad actor" disqualifications would continue to apply and could be formalized to include disqualifications under Section 8a(2) of the Commodities Exchange Act. These disqualifications include, among other things, serious types of financial crimes (such as theft, fraud, bribery, embezzlement, and misappropriation) as well as findings or settlements consenting to findings that a person has violated a US investment-related statute and/or rules and regulations.³

A number of others have also suggested that the offering cap be raised. In the SEC's Report on the 44th Annual Small Business Forum, the SEC considered whether Regulation A's offering cap should be raised to $150 million. Others have suggested raising the cap even more significantly.⁴ For instance, Jay Clayton, the former Chairman of the SEC, suggested that the cap be raised to $1 billion or $2 billion.⁵ Any increase to the maximum aggregate offering amount would minimize the paperwork burden and reduce the monetary and time constraints that arise from preparing and filing either a PQA or an offering statement on Form 1-A, without impacting investor protections.

Regulation A should be amended to permit issuers conducting a continuous offering, who are otherwise required to file PQAs once every 12-months, to include in such amendment the ability to qualify an additional $75 million for the following 12-month period, provided that such issuers may not sell more than $75 million in any 12-month period.

Pursuant to Rule 251, Tier 2 issuers may raise an aggregate of $75 million during any rolling 12-month period. Such issuers who wish to raise additional capital in excess of this amount may file a PQA to qualify an amount that, in the aggregate, would not result in the issuer offering more than $75 million over the prior rolling 12-month period. In certain circumstances, issuers may stagger their capital raise over a 12-month or longer period as permitted in a continuous offering and raise more money in certain months than in others. Regulation A often requires issuers to file multiple PQAs over a 12-month period in order for such issuer to continue to sell shares up to the $75 million cap.

For example, under current SEC guidance on Regulation A, if an issuer in a continuous offering were to sell $5 million of qualified securities in month one, $5 million in month two, and thereafter sell the $65 million remainder of the $75 million cap over the next 10 months, in month 13 such issuer is only able to file a PQA to qualify an additional $5 million of securities. If the issuer wanted to continue its offering, it would need to file consecutive PQAs each month to qualify the amount of securities under the cap that would "free up" each month.

Requiring issuers to file multiple PQAs over the course of a year can create tens of thousands of dollars in unnecessary expenditures for each PQA filed because such filings necessitate the legal costs of preparing the documents and opinions as well as obtaining auditor consents and they require management's time and energy while doing nothing to enhance investor protection or increased disclosure. Further, because each PQA must be reviewed and qualified by the SEC, requiring the filing of multiple PQAs to keep a continuous offering ongoing creates immense operational uncertainty for issuers since it can be difficult to predict how long such a qualification process may take, as discussed in more detail below. Such operational uncertainty is, by definition, a greater problem precisely when smaller companies need more visibility into the timing of capital raising. Limiting the ability of issuers to raise capital under Regulation A in a subsequent year based on the success of capital raising in a previous year inherently penalizes those issuers in which there is the most public interest.

Rule 252 of the Securities Act already requires issuers in continuous offerings to file a PQA at least once every 12 months after qualification. By amending Rule 251 to permit issuers, as part of the required annual PQA filings, to qualify an additional $75 million regardless of the amount such issuers have sold up to that date, and provided that such issuers do not sell more than $75 million in the 12-month period following the qualification of the PQA, such amendment would minimize the substantial financial and time burden on issuers who would otherwise need to make multiple filings, and it would alleviate uncertainties associated with such filings without changing the substance of Rule 251 (i.e., that issuers only be allowed to raise $75 million per rolling 12-month period.

Rule 251 should be amended to permit issuers, as part of annual PQA filings, to qualify an additional $75 million (or whatever the maximum amount is if raised by the SEC), provided that such issuers may only sell up to $75 million in the 12-month period following the qualification of the PQA. The SEC could amend Rule 251 to minimize the overall burden on issuers while still maintaining the rolling maximum offering amount.

Regulation A should be amended to permit forward incorporation of periodic and current reports.

Pursuant to Rule 257 of the Securities Act, Tier 2 issuers must file certain periodic and current reports with the SEC. Form 1-A prohibits forward incorporation of such filings, meaning that information from future filings does not automatically get incorporated into a Form 1-A. As noted above, Rule 252 specifically requires the filing of a PQA annually to include (i) updated financial statements, and (ii) any updates that represent a fundamental change to that previously disclosed in the offering statement. Forward incorporation of certain future filings would permit Tier 2 issuers to incorporate into their offering statement information (e.g., updated financial statements) that would otherwise need to be filed in a 253(g)(2) filing to update the offering circular and a future PQA. Given that the annual PQA filings will still be required, this change would not undercut the liability that attaches to the financial statements under Rule 12(a)(2) under the Securities Act. Forward incorporation of periodic and current reports would help minimize the burden of the collection of information requirements on Tier 2 issuers because such issuers would be able to expend less time and money in connection with preparing and filing 253(g)(2) filings and updated PQAs. Instead, the information contained in the publicly available periodic and current reports filed with the SEC would automatically be incorporated into the issuer's offering statement. This amendment would alleviate the reporting and cost burdens imposed on Tier 2 issuers because it would cut down on the number of repetitive 253(g)(2) filings an issuer would need to make and make the annual PQA filing requirement less of a burden to issuers conducting continuous offerings.

SEC filing review times of Regulation A offering statements and PQAs need to be expedited and dictated by rules or regulation.

In recent years, SEC review times of Regulation A offering statements and PQAs have slowed, and in some cases, they have extended beyond a year. These long and inconsistent review times include offering statements and PQAs for existing Regulation A filers where the SEC has previously reviewed the same or similar disclosure. For small businesses that are looking to raise capital quickly and efficiently, such lengthy and inconsistent reviews are time-consuming and costly, drain limited resources, delay important business initiatives, and create significant operational uncertainty. Accordingly, we recommend that review times of offering statements and PQAs be dictated by SEC rules or regulations, that a preliminary review by the SEC of an offering statement or PQA should take no more than 20 calendar days, and that all subsequent comment letters should be issued no later than five calendar days after the filing of an amendment to the offering statement or PQA in response to a previous SEC comment letter.

Additionally, we would propose that the SEC only review those PQAs that reflect material and non-routine changes and that other PQAs be automatically qualified. With respect to what constitutes non-material changes, one approach would be for the SEC to draw a parallel to filings made by certain registered investment companies pursuant to Rule 485(b) of the Securities Act. Rule 485(b) outlines certain conditions, including enumerating certain types of changes that the SEC considers to be non-material, which, if met, result in the immediate effectiveness of a post-effective amendment to a registration statement. For instance, one such change deemed to be a routine and non-material change under Rule 485(b) involves updating financial statements to meet the age of financial statement requirement.

Filers should only be required to provide audited financial statements if the issuer meets certain thresholds related to assets, revenues, or capital raised under Regulation A.

As discussed above, Tier 2 issuers are required under Regulation A to provide audited financial statements in each offering statement, which imposes a high time and cost burden on issuers. We propose that the SEC adopt an approach whereby audited financial statements are only required for those issuers that have met certain asset, revenue, or capital raised under Regulation A thresholds. This would alleviate a meaningful deterrent to those issuers who wish to initially undertake offerings of smaller portfolios of assets or single assets. A number of Regulation A issuers are series limited liability companies, and these thresholds could be applied at the series level to avoid audits of each series.

The SEC should revise Rule 12g5-1 of the Exchange Act to increase the threshold dollar amount with respect to Regulation A issuers' annual revenues.

Pursuant to Rule 12g5-1(a)(7)(iv), Tier 2 issuers under Regulation A are exempt from the Exchange Act's registration requirements if, among other requirements, such issuers have annual revenues of less than $50 million as of their most recently completed fiscal year. We recommend that the SEC revise that threshold up (e.g., to $100 million) to provide companies with more operational runway prior to becoming subject to the enhanced disclosure requirements and increased burden of becoming a reporting company, especially where a company may be forced to be a reporting company even though it is not listed on a national securities exchange.

Targeted reforms to Regulation A—such as raising offering limits, permitting forward incorporation of reports, streamlining the PQA process, expediting SEC review timelines, limiting audited financial statement requirements, and delaying Exchange Act registration—would meaningfully strengthen its effectiveness as a capital-raising tool. Modernizing Regulation A would also benefit investors with increased access to emerging companies that historically have raised capital from institutional investors in private markets. By reducing unnecessary regulatory friction while preserving robust investor protections, these changes would enhance the utility of Regulation A for small businesses, enabling them to access capital more efficiently and provide US companies with a path to an eventual listing on a national securities exchange.

Footnotes

1 Market Statistics of Exempt Offerings under Regulations A, D, and Crowdfunding (March 2025).

2 Conditional Small Issues Exemption Under the Securities Act of 1933 (Regulation A), (Release No. 33-10591) (December 19, 2018).

3 CFTC and SEC Chairmen Sign Joint Letter Establishing Pilot Program Relating to "Bad Actor Disqualification" Provisions of Regulations A and D (Release Number 8294-20) (October 20, 2020).

4 U.S. Securities and Exchange Commission Report on the 44th Annual Small Business Forum (September 22, 2025), https://www.sec.gov/files/2025-oasb-annual-forum-report.pdf.

5 John Filar Atwood, Clayton Willing to Serve Again, Discusses Expected Change in Regulatory Approach, Sec. Reg. Daily Wrap Up (CCH) (November 13, 2024), https://www.vitallaw.com/news/sec-news-and-speeches-clayton-willing-to-serve-again-discusses-expected-change-in-regulatory-approach/sld017c12f47ac0554ead9925f25e88ce8aa8.

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