ENDNOTES
1 Securities Act Release No. 66, 1933 WL 28878 (Nov. 1, 1933).
2 Regulation A consists of Rules 251 through 263. 17 CFR §§ 230.251–.263, hereinafter cited by rule number.
3 See Pub. L. No. 96-477, § 301, 94 Stat. 2275, 2291 (1980).
4 See Small Business Initiatives, Securities Act Release No. 6949, 1992 WL 188930 (July 30 1992).
5 President Bush announced: “[the] goal . . . is to . . . eliminate or revise those [securities laws] that clearly impose costs that exceed their benefits, and [to] ensure that other regulations are implemented in a cost-effective manner.” Council of Economic Advisers, The Annual Report of the Council of Economic Advisers, in ECONOMIC REPORT OF THE PRESIDENT, 191 (1992).
6 The SEC highlighted in the proposing release the decline in the number of small business IPOs between 1986 and 1991 as well as the declining number of Regulation A filings between 1981 and 1991. See Securities Act Release No. 6,924, 1992 WL 52840 (March 11 1992) (“Since 1986, equity IPOs have declined each year until the turnaround in 1991. Forty-four Regulation A financings were filed in FY 1991 with the Commission, representing financings of $41.5 million, in contrast with 439 filings covering financings of $408 million in FY 1981.”).
7 See id. (“Small businesses are the cornerstone of the U.S. economy. The approximately 20 million small businesses in the United States employ more than half of the domestic labor force, produce nearly half of the gross domestic product and created the vast preponderance of new jobs during the period from 1988 through 1990.”).
8 See Small Business Initiatives, Securities Act Release No. 6949, 1992 WL 188930 (July 30 1992).
9 See id. at *2. 10 See generally Rules 251–63. 17 CFR §§ 230.251–.263.
11 Rule 251(a)(1). An issuer that is a corporation, an unincorporated association, or a trust must be incorporated or organised “under the laws of the United States or Canada, or any State, Province, Territory or possession thereof, or the District of Columbia.”
58 JOBS Act Quick Start
12 Rule 251(a)(2). The requirement that the issuer is a non-reporting company was added to Regulation A in 1992. See Small Business Initiatives, Securities Act Release No. 6949, 1992 WL 188930 (July 30 1992).
13 Rule 251(a)(3). The term “development stage company” is not defined in Regulation A or Rule 405. However, the adopting release makes clear that Rule 251(a)(3) is intended to disqualify only “blank check” companies. See 1992 WL 188930, at *3.
14 Rule 251(a)(4). 15 Rule 251(a)(5). Note that Rule 251(a)(5) does not prevent companies in the oil and gas industry from using Regulation A for offerings of, for example, their common stock or bonds.
16 See Rule 262(a), (b), and (c). 17 See Rule 251(b). 18 Rule 251(d)(3). 19 Rule 253(e)(2). 20 Rule 251(c)(2)(v). 21 See Rule 252(e) and (g). 22 See Small Business Initiatives, Securities Act Release No. 6949, 1992 WL 188930 (July 30 1992).
23 Rule 253(a). 24 See Form 1-A, Part II. 17 CFR § 239.90. 25 See Form 1-A, Part F/S. If the issuer has been in business for less than two years, financial statements for that shorter period are required. Id.
26 Id. 27 Rule 254(a). 28 See Finra Rule 5110. 29 See NASD Notice to Members 92-28 (May 1992); see also NASD Notice to Members 86-27 (Apr. 1986).
30 The SEC has emphasised this advantage in the past. See, e.g., Securities Act Release No. 5977, 1978 WL 196028, at *2 (September 11 1978).
31 An issuer may choose to prepare and file a Form 10 to register one or more classes of securities under section 12 of the Exchange Act with the SEC.
32 See A Proposal to Increase the Offering Limit Under SEC Regulation A: Hearing Before the H. Comm. on Fin. Servs., 111th Cong. 10 (2010) (statement of Michael Lempres, Asst. Gen. Counsel, SVB Financial Group) (“The impetus behind the creation of regulation A was very good one. Unfortunately, in recent years, as you’ve been
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