While Regulation A+ and Regulation Crowdfunding are opening more doors for Americans to invest in promising companies, both differ in terms of factors that can impact your investment decision and potential return.

These factors include how much information companies must disclose, how much money you can invest, and how and when you can resell shares.

What exactly is a Regulation A+ offering?

Regulation A+ is a crowdfunding exemption that allows companies to raise up to $50 million from accredited and non-accredited investors, and offer them equity in return. Accredited investors are individuals who earn an annual income of $200,000 or have a net worth over $1 million. Non-accredited investors are individuals who do not meet these requirements.

What information must companies disclose in a Regulation A+ offering?

  • Form 1-A: A legal document that companies must file with the US Securities Exchange Commission (SEC) prior to starting their offering. It contains detailed information about their offering, financials, properties, directors, executive officers and employees, security holders, risk factors, and more. 
  • Form 1-K: A legal document that companies must file with the SEC on an annual basis. It contains detailed information about their earnings, losses, and deductions.
  • Form 1-SA: A legal document that companies must file with the SEC on a sem-annual basis. It contains detailed information about their financial condition and operating results. 
  • Form 1-U: A legal document that companies must file when a major event occurs. It contains detailed information about the event, which could be changes to shareholder rights or declaring bankruptcy.
  • Investors can access a company’s Form 1-A, Form 1-K, Form 1-SA, and  Form 1-U on the SEC’s EDGAR website.

How much can investors invest in a Regulation A+ offering and when can they resell shares?

  • Accredited investors can invest any amount in one or more offering during a 12-month period.
  • Non-accredited investors can invest a maximum of 10% of their annual income or net worth — whichever is less — in one or more offering during a 12-month period.
  • While investors can resell shares at any time, there is currently no established secondary market that will provide that opportunity.

What exactly is a Regulation Crowdfunding offering?

Regulation Crowdfunding is a crowdfunding exemption that allows companies to raise up to $1.07 million from accredited and non-accredited investors, and offer them equity in return.

What information must companies disclose in a Regulation Crowdfunding offering?

  • Form C: A legal document that companies must file with the SEC prior to starting their offering. It contains information about their offering, financials, management, risk factors, and more.
  • Form C-AR: A legal document that companies must file with the SEC on an annual basis. It contains important updates about the company that have occurred since filing their Form C or previous Form C-AR.
  • Form C-U: A legal document that companies must file when a major event occurs. It contains detailed information about the event which may impact investors.
  • Investors can access a company’s Form C, Form C-AR and Form C-U on the SEC’s EDGAR website.

How much can investors invest in a Regulation Crowdfunding offering and when can they resell shares?

  • Accredited investors can invest a maximum of $107,000 in one or more offering during a 12-month period.
  • Non-accredited investors can invest a maximum of 5% of their annual income or net worth — whichever is less — in one or more offering during a 12-month period.
  • Investors are prohibited from reselling shares for one year, unless they are transferred to the company, an accredited investor, a family member or the equivalent, or a trust controlled by them or a family member or the equivalent.

What else should investors know about Regulation A+ and Regulation Crowdfunding offerings?

Currently, the Association of Online Investment Platforms (AOIP), a group of online investment platforms that aims to democratize finance for everyone, is asking Congress to make various changes to its Regulation A+ and Regulation Crowdfunding rules. 

These changes include updating the definition of an accredited investor, increasing how much accredited and non-accredited investors can invest, and developing a tax exemption for accredited and non-accredited investors in the form of credits or deductions.

Interested in learning more? Sign-up to receive the latest updates on our investment offerings and insight reports.