How Does Offering Integration Impact Reg A Offerings?

Offering integration can become a problem for some issuers conducting  Regulation A+ (also known as Reg A) offerings.  The Reg A offering integration rules prevent companies from improperly avoiding SEC registration by dividing a single securities offering into multiple securities offerings to take advantage of Securities Act exemptions that would not be available for the combined offering.

A  Reg A + offering will not be integrated with any preceding securities offers or sales.  Additionally, securities offers or sales that take place after a Regulation A+ offering will not be integrated with other securities offerings that:

• Are registered pursuant to Securities Act, unless the abandoned Regulation A + offering provisions are applicable,
• conducted pursuant to Rule 701 of the Securities Act;
• conducted pursuant to employee benefit plans;
• conducted pursuant to Regulation S of the Securities Act;
• conducted pursuant to Regulation Crowdfunding aka Regulation CF; or
• conducted more than six months after the completion of the Regulation A + offering.

If no safe harbor is available, integration will depend upon the particular facts and circumstances of the particular offering.  Reg A +’s adopting release states that a Reg A offering should not be integrated with another exempt offering if each of the offerings complies with the requirements of its exemption.

Issuers simultaneously conducting a Reg A+ offering and an exempt offering where general solicitation is not permitted such as in a Regulation D Rule 506(b) offering must ensure that investors in the exempt offering were not solicited through the Reg A offering. This includes any testing the waters communications made pursuant to Reg A +.

Similarly, an issuer using general solicitation and/or advertising in a Rule 506(c) offering simultaneously with a Reg A offering should not advertise the Reg A offering in its Rule 506(c) offering materials, unless the advertisement complies with Reg A’s requirements.

For general information about integration of offerings, see “Will My Offerings Be Integrated?”

This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute legal advice on any specific matter, nor does this message create an attorney-client relationship.  Please note that the prior results discussed herein do not guarantee similar outcomes.

Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
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Boca Raton, Florida 33432
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