DEFINITION of 'SEC Form 1-A'

SEC Form 1-A is a filing with the Securities and Exchange Commission (SEC) required for the registration of certain securities. Securities issued in reliance upon Regulation A provisions must provide investors with an offering statement that meets the requirements of Form 1-A.

BREAKING DOWN 'SEC Form 1-A'

Form 1-A is also known as the Regulation A Offering Statement under the Securities Exchange Act of 1933.

The act is often referred to as the "truth in securities" law. It requires that these registration forms, which are meant to provide essential facts, are filed to disclose important information upon registration of a company's securities. This helps the SEC achieve the objectives of this act by requiring that investors receive significant information regarding securities offered and prohibiting fraud in the sale of the offered securities.

Limits and Rules for Using SEC Form 1-A

Rules governing Form 1-A were revised in 2015 to allow the statement to be used for offerings up to $50 million. The statement can be used for two segments of offerings limited by their value. Tier 1 is capped at $20 million for the aggregate offering price and aggregate sales of securities offered over a 12-month period. Tier 2 is limited to $50 million in securities offerings in a 12-month period. These aggregate limits include a restriction that for Tier 1 offerings no more than $6 million can be offered by all selling security holders that are affiliates of the issuer. The limit for Tier 2 offerings is $15 million for all selling security holders that are affiliates of the issuer.

Submissions of Form 1-A may include additional information as a supplemental part of the filing. This can include a statement regarding whether or not the amount of compensation to be paid to the underwriter was cleared with the Financial Industry Regulatory Authority (FINRA). The supplemental information can also include reports referenced in the offering circular or used externally by the issuer or principal underwriter in relation to the offering.

If such reports were used, a statement must be included that defines their actual use and how they were distributed. This must include details that identify the class of individuals who received or will receive the reports. The statement must also include the number of copies distributed to each class. There must be a statement on the proposed use of the reports. Additional information may be requested by regulators to support the statements and other assertions presented in the offering statement.

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