Disclosure obligations imposed on public companies by the Securities and Exchange Commission (SEC) have been criticized as too lengthy, too prolix and not sufficiently helpful for making investment decisions.1 In 2012, Congress passed the Jumpstart Our Business Startups (JOBS) Act2 to relieve small businesses of various disclosure obligations and other requirements when raising capital. Emerging growth companies (ECGs) are relieved from some normal disclosure requirements in initial public offerings (IPOs) under the Securities Act of 1933 (Securities Act) and are not necessarily required to become registered and reporting companies under the Securities Exchange Act of 1934 (Exchange Act) after making an offering of their securities.3
In April, the SEC adopted amendments to Regulation A and other rules to implement Section 401 of the JOBS Act and provide an exemption from registration for offerings up to $50 million.4 These rules created Tier 1 offerings of up to $20 million annually, including no more than $6 million on behalf of selling securities holders, and Tier 2 offerings of up to $50 million annually, including no more than $15 million on behalf of selling shareholders.5
