Regulation A Offering

A Regulation A offering is a securities offering made under 17 CFR 230.251 through 230.263, an exemption that lets a company sell to the general public without a full registration statement. The rule's own language matters here: section 230.251(a) provides that "a public offer or sale of eligible securities ... pursuant to Regulation A shall be exempt under section 3(b) from the registration requirements of the Securities Act of 1933." That single word, public, is the whole difference from a private placement, which relies on the section 4(a)(2) exemption for transactions not involving any public offering.

Instead of registering, the issuer files an offering statement on Form 1-A, which includes an offering circular, and the SEC staff reviews it and eventually qualifies it. No sale may be made until qualification. The regime splits into two tiers with different ceilings, different audit requirements, different ongoing reporting and, most consequentially, different treatment under state law. Market materials sometimes write the post-2015 regime as "Regulation A+"; the regulation's own name carries no plus sign.

The two tiers. Under section 230.251(a)(1), a Tier 1 offering is one in which the aggregate offering price plus aggregate sales in the prior 12 months "does not exceed $20,000,000, including not more than $6,000,000 offered by all selling securityholders that are affiliates of the issuer." Section 230.251(a)(2) sets the Tier 2 figures at $75,000,000 and $22,500,000 on the same measure. Separately, section 230.251(a)(3) caps the portion attributable to selling securityholders at 30 percent of the aggregate offering price in an issuer's first Regulation A offering, or in any Regulation A offering qualified within one year of that first qualification date. All of these are rule-set amounts read from the eCFR text in force in September 2026; they change by rulemaking rather than annually, so they are not inflation-adjusted the way Regulation Crowdfunding's limits are.

Tier 1 is cheap and stays local; Tier 2 is expensive and preempts the states. For a Tier 1 offering the circular is reviewed by SEC staff and, in the SEC's words, "is generally subject to review and qualification by the securities regulator in the states where the offering is being conducted," and the financial statements "do not have to be audited." Ongoing reporting is a single exit report: section 230.257(a) requires a Tier 1 issuer to file Form 1-Z "not later than 30 calendar days after the termination or completion of the offering." A Tier 2 circular is reviewed by SEC staff but "is not subject to review or qualification by state securities regulators," the financial statements must be audited by an independent accountant, and section 230.257(b) imposes continuing reports: an annual report on Form 1-K, a semiannual report on Form 1-SA, and current reports on Form 1-U. The SEC's investor bulletin adds the deadlines for those three: 120 days after fiscal year end, 90 days after the semiannual period, and four business days after certain events including a fundamental change, bankruptcy, change in accountant or change in control.

The preemption mechanism runs through a definition, and it is a false friend. Nothing in Regulation A simply says "states are preempted for Tier 2." Instead 17 CFR 230.256 provides that, for purposes of section 18(b)(3) of the Securities Act, "a 'qualified purchaser' means any person to whom securities are offered or sold pursuant to a Tier 2 offering of this Regulation A." Federal law, at 15 U.S.C. 77r(b)(3), makes a security covered "with respect to the offer or sale of the security to qualified purchasers", a term the statute leaves the SEC to define by rule, and section 77r(b)(4)(D)(ii) applies the same route to securities sold under a rule adopted pursuant to section 3(b)(2). So every Tier 2 buyer is a "qualified purchaser" by definition, and that is what removes state registration. This phrase is not the qualified purchaser of the Investment Company Act, section 2(a)(51), which is a wealth test used to gate certain private funds. Two regimes, one phrase, no relationship between them, and a reader who carries the private-fund meaning into Regulation A will conclude the opposite of the rule.

Who may invest, and the limit that is narrower than its reputation. Regulation A is open to investors who are not accredited, and there is only one situation in which an amount is capped. Section 230.251(d)(2)(i)(C) forbids a sale "in a Tier 2 offering of securities that are not listed on a registered national securities exchange upon qualification, unless the purchaser is either an accredited investor ... or the aggregate purchase price ... is no more than ten percent (10%) of the greater of such purchaser's" annual income or net worth. Three conditions have to hold at once, and the measure is the greater of the two figures, not the lesser, with net worth computed excluding the primary residence and loans secured by it up to the residence's value. Section 230.251(d)(2)(i)(D) lets the issuer rely on the purchaser's representation unless it knows the representation is untrue. Under Tier 1 the SEC states plainly that "there are no limitations on whether you can invest, or how much you can invest."

Qualification is not approval, and resale freedom is not liquidity. The SEC's bulletin on Regulation A says that "the SEC does not pass upon the merits or give its approval to any securities offered," and adds that "fraudsters have in the past characterized certain SEC filings and actions, such as qualifications, as formal approvals in order to mislead investors." On resale, the same bulletin states: "Even though there is no resale restriction, you may need to hold your investment for an indefinite period of time. If the securities are not, and if there are no plans for the securities to be, listed on an exchange where you can quickly and easily trade the securities, you will have to locate an interested buyer when you do seek to resell your investment." The first clause is real. Rule 144's definition of restricted securities, at 17 CFR 230.144(a)(3), has eight limbs, none of which reaches Regulation A, while limb (ii) expressly reaches securities subject to the resale limitations of section 230.502(d) under Regulation D. But the practical consequence is the second clause, and stating only the first misdescribes the investment.

Not every issuer may use it. Section 230.251(b) requires the issuer to be organized under United States or Canadian law with its principal place of business in one of those countries, and excludes a development-stage company with no specific business plan or whose plan is to merge with an unidentified company, a registered investment company or business development company, an issuer of fractional undivided interests in oil, gas or other mineral rights, an issuer subject to a Commission order under Exchange Act section 12(j) within the previous five years, an issuer delinquent in its Regulation A or Exchange Act reports, and an issuer disqualified under Rule 262. Section 230.251(d)(3)(ii) also provides that "at the market offerings ... are not permitted under this Regulation A," meaning the issuer cannot sell into an existing trading market at other than a fixed price.

A Regulation A offering proceeds in a set sequence. The issuer may test the waters first, soliciting indications of interest under Rule 255 before anything is filed. It then files an offering statement on Form 1-A through EDGAR. Between filing and qualification it may make oral offers and written offers meeting Rule 254, but no sales. SEC staff review the circular and qualify the offering statement; a Tier 1 issuer will typically also be going through review in each state where it plans to sell. Only after qualification may the issuer accept payment, and for an issuer not already reporting under Rule 257(b) the preliminary offering circular must reach anyone who indicated interest before qualification at least 48 hours before their sale. After the offering, a Tier 1 issuer files a single Form 1-Z exit report within 30 calendar days of termination or completion, while a Tier 2 issuer begins filing 1-K, 1-SA and 1-U reports.

A hypothetical example of the investment limit, using the three conditions in section 230.251(d)(2)(i)(C). Priya has annual income of $90,000 and net worth of $150,000 excluding her home, and is not an accredited investor. She wants to buy shares in a Tier 2 offering whose securities will not be listed on an exchange at qualification. All three conditions hold, so her cap is 10 percent of the greater of $90,000 and $150,000, which is 10 percent of $150,000, or $15,000. Had the same issuer run a Tier 1 offering, no cap would have applied to her at all. Had she been accredited, no cap would have applied either. And had the shares been listed on a national securities exchange upon qualification, the limit would not have applied even to a non-accredited buyer.

Pros

• Open to the general public, so an investor who is not accredited can buy into a private company without the wealth or credential gate a private placement imposes.
• The offering circular is a real disclosure document reviewed by SEC staff before any sale, unlike the after-the-fact Form D notice in a private placement.
• The securities are not restricted securities under Rule 144, so there is no contractual or regulatory holding period on resale.
• Tier 2 brings audited financial statements and continuing reports on Forms 1-K, 1-SA and 1-U, giving a holder ongoing information about the issuer.

Cons

• Qualification is not an SEC endorsement, and the SEC has warned that fraudsters have presented qualifications as approvals.
• Freely resellable is not the same as liquid: without an exchange listing the holder has to find a buyer, and the SEC says the holding period may be indefinite.
• Tier 1 financial statements need not be audited, and Tier 1 issuers file nothing after the offering but a single exit report.
• Disclosure is lighter than a registered offering by design, so the investor is comparing a smaller, earlier-stage company on less information.
• A non-accredited buyer in an unlisted Tier 2 offering is capped at 10 percent of the greater of income or net worth, which can be an awkward constraint mid-offering.