Under U.S. securities laws, offerings or sales of securities must be registered with the Securities and Exchange Commission (“SEC”) unless an exemption applies. Regulation A, often referred to as a “mini IPO,” is a registration exemption for certain public offerings, allowing eligible issuers to raise up to $75 million without the full SEC registration process. Below is a breakdown of what Regulation A is, how it currently works, and how Regulation A could change in the future.
What is Regulation A?
Regulation A exempts certain offerings from registration with the SEC, provided that the issuer meets certain eligibility criteria and falls under one of two tiers. In contrast to a traditional IPO, Regulation A offers a less expensive and more easily accessible path for small to mid-size companies to raise capital. Regulation A exempts two tiers of offerings:
- Tier 1: Offerings of up to $20,000,000 in a 12 month period
- Tier 2: Offerings of up to $75,000,000 in a 12 month period
Regulation A is available to any US and Canadian company, so long as they are not: (i) an investment company required to be registered under the Investment Company Act of 1940, (ii) a blank check company, or (iii) disqualified under the SEC’s “bad actor” disqualification rules.
How does Regulation A Work?
To initiate a Regulation A offering, the issuer must file a Form 1-A offering statement with the SEC. The SEC then declares the offering statement “qualified” by a “notice of qualification.” Unlike a traditional IPO, issuers are permitted to “test the waters” and gauge public interest in the offering before becoming qualified. Once qualified, the issuer may begin its securities offering in compliance with the requirements of Tier 1 and Tier 2 requirements. Below is a chart breaking down the two tiers:
|
Tier 1 |
Tier 2 | |
| Max Capital Raise | Offerings of up to $20 million in a 12 month period, including a maximum of $6 million in secondary sales by issuer affiliates | Offerings of up to $75million in a 12 month period, including a maximum of $22.5 million in secondary sales by issuer affiliates |
| State Regulation | Blue sky registration and qualification requirements required in all states | Exempt from blue sky registration and qualification requirements of relevant states
|
| Ongoing Reporting Requirements | No ongoing reporting requirements. Issuers must file an exit report within 30 days after the offering terminates.
|
Subject to ongoing reporting obligations including annual reports on Form 1-K, semi-annual reports on Form 1-SA, current reports on Form 1-U, and exit reports on Form 1-Z |
|
Investment Limits |
None | Non-accredited investors are only allowed to invest a maximum of 10% of their total income or net worth |
| Financials | Financial statements filed are not required to be audited | Financial statements must be audited |
How Regulation A Could Change in the Future
Recently, on July 22, 2025, the Securities and Exchange Commission’s Small Business Capital Formation Advisory Committee hosted an interactive conference to discuss Regulation A and proposed rule exempting certain finders from broker-dealer registration. At the conference, the speakers acknowledged that Regulation A offerings are not commonly used due to the complex process and higher costs compared to Regulation D offerings. The speakers pushed to modernize Regulation A, noting that successful offerings may still hinder future capital raising and that marketing a Regulation A offering remains challenging. The discussion focused on addressing state securities law preemption for Tier 1 and Tier 2 offerings, strengthening secondary markets for Regulation A issuers, reevaluating the tier structure and its alignment with different company types, and exploring how Regulation A can better serve the capital needs of small issuers.
This discussion signals that regulatory reform could be in the future to improve Regulation A’s effectiveness and increase its’ use. Many are urging for lawmakers to broaden federal preemption to make Regulation A easier to use across all states, restructure the tiers and potentially adjust the thresholds to better suit issuers and reduce the Tier 2 reporting and audit requirements.
While Regulation A isn’t currently widely used, updating the regulatory framework may make Regulation A more attractive to issuers and an effective tool for capital formation. Issuers and investors alike should watch for changes that could make Regulation A more appealing in the years ahead.