Welcome to Regulation A, Regulation S, and Intrastate Offerings: three separate paths that let an issuer raise money without a full Securities Act registration, and the unit that teaches you which path fits which deal.
Exam Weight: 3 scored items within Function 1 (25 items / 50% of exam)
What You'll Learn
In this unit, you'll cover:
- Regulation A's Two-Tier Structure: The dollar caps, affiliate-sale limits, and state blue-sky treatment that separate a Tier 1 offering from a Tier 2 offering
- Secondary Sales and the Non-Accredited Investor Limit: The 30% first-year cap on sales by existing holders and the 10% limit on how much a non-accredited investor can commit to a Tier 2 offering
- Qualification and Ongoing Reporting: How an offering statement gets qualified, who is eligible to use Regulation A at all, and the reports each tier owes the SEC afterward
- Intrastate Offering Residency Tests: The state-residency and doing-business rules an issuer must meet to sell securities without registering under the Securities Act
- Intrastate Resale Limits and Issuer Precautions: The six-month resale restriction, the four precautions that protect it, and the lockout on starting a second intrastate offering in a different state
- The Offshore Transaction Safe Harbor: The two conditions that let a genuinely offshore offer or sale escape Securities Act registration entirely
- Categories and Distribution Compliance Periods: The three categories of offshore offering and how long resales into the United States stay restricted under each
Why This Matters
Small and mid-size issuers rarely go straight to a full public offering. Regulation A, the intrastate exemption, and Regulation S are the practical alternatives, and each one trades a lighter compliance burden for a different constraint: a narrower buyer pool for the intrastate exemption, a resale restriction for Regulation S, and an investment cap plus ongoing reporting for Regulation A.
A private securities offerings representative needs to match a client's deal to the right exemption:
- A growth-stage company raising up to tens of millions of dollars from the general public often fits Regulation A
- A business raising money only from residents of its own state can use the intrastate exemption instead
- A foreign issuer, or a domestic issuer selling genuinely offshore, can rely on Regulation S instead of registering at all
Let's start with Regulation A's two-tier structure, since the tier an issuer chooses shapes every other Regulation A rule. It has no bearing on the intrastate exemption or on Regulation S.