What Is SEC Form 1-A?

SEC Form 1-A is a filing with the Securities and Exchange Commission (SEC) by entities seeking exemption for registration requirements for certain public offerings. Securities issued in reliance upon Regulation A provisions must provide investors with an offering statement that meets the requirements of Form 1-A. The form is also known as the Regulation A Offering Statement under the Securities Exchange Act of 1933.

Key Takeaways

  • SEC Form 1-A is a filing with the Securities and Exchange Commission by entities seeking exemption for registration requirements for certain public offerings under Regulation A.
  • Regulation A waives registration requirements for registration requirements for any public offering of securities of $50 million or less within a 12-month period, and is divided into two tiers.
  • 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.

Understanding SEC Form 1-A

The Securities Exchange Act of 1933, also known as the truth in securities law, requires companies to file registration forms which disclose important information about their securities. By doing so, investors are able to receive significant information about securities offered, while prohibiting fraud in the sale of the offered securities.

Form 1-A is an offering statement that must be filed no later than 21 days before the offering statement is qualified by the SEC. The form is completed by anyone who wants an exemption under Regulation A. This regulation waives registration requirements for registration requirements for any public offering of securities of $50 million or less within a 12-month period.

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 1 offerings no more than $6 million can be offered by all selling security holders that are affiliates of the issuer.
  • Tier 2 is limited to $50 million in securities offerings in a 12-month period. The limit for Tier 2 offerings is $15 million for all selling security holders that are affiliates of the issuer. Tier 2 offerings are subject to regular reporting requirements including annual reports, special financial reports, and exit reports.

There are three parts to Form 1-A. The first part outlines basic information about the issuer including the security and where it will be offered. Part two requires specific disclosures including information about the business and its management such as compensation, information about beneficial ownership, how the proceeds of the offering will be used, as well as potential risks involved with the security offering. The third part normally includes specific documents and other exhibits.

The three parts of Form 1-A contain important information including details about the security, disclosures about the business and its management, as well as other exhibits.

Special Considerations

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.