On June 23, 2015, the Staff (the “Staff”) of the Securities and Exchange Commission (the “SEC”) published several new Compliance and Disclosure Interpretations (“Interpretations”) relating to rules and forms under the Securities Act of 1933, as amended (the “Securities Act”). These Interpretations address questions and considerations relating to “Regulation A+”, which was adopted by the SEC on March 25, and became effective last Friday, June 19.
Gibson Dunn’s client alert regarding the adoption of Regulation A+ is available at the following link: (https://www.gibsondunn.com/publications/pages/SEC-Adopts-Final-Rules-Implementing-Regulation-A-Offering-Exemption–up-to-$50Million.aspx)
The key Interpretations are summarized below:
- Confidential Filings. If an issuer elects to have its offering statement reviewed confidentially by the Staff, and at the time it first files its offering statement makes public on EDGARLink all prior draft offering statements, it need not refile such drafts as an exhibit to the publicly filed Form 1–A. It will be required, however, to file any non-public correspondence as an exhibit to its public offering statement (Question 182.01).
- Confidential Treatment Requests. If an issuer elects to have its offering statement reviewed confidentially by the Staff, and submits correspondence relating to that offering statement, it may request confidential treatment of information in its correspondence pursuant to Rule 83 under the Securities Act, in a manner similar to the review process in a typical registered offering. When the issuer subsequently makes its public filing of the offering statement and files any correspondence relating to the review in accordance with the requirements of Regulation A+, it would redact the confidential information from the filed correspondence exhibit, include the required legends and redaction markings and submit a request to the SEC for confidential treatment in accordance with Securities Act Rule 406. The SEC will act on the confidential treatment request prior to qualifying the offering statement (Question 182.02).
- Principal Place of Business. An issuer will be considered to have its “principal place of business” in the United States or Canada for Regulation A+ eligibility purposes if the issuer’s activities are primarily directed, controlled and coordinated from those countries (i.e., the issuer’s headquarters are located within the United States or Canada), even if the issuer’s operations are located outside of the United States or Canada (Question 182.03).
- Issuers That Have Previously Gone Dark. If an issuer has “gone dark” (i.e., suspended its reporting obligations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), it may still be considered an eligible issuer for Regulation A+ purposes, as it is no longer subject to either Section 13 or 15(d) of the Exchange Act (Question 182.04).
- Voluntary Filers. Voluntary filers under the Exchange Act are considered eligible issuers for Regulation A+ purposes, as these filers are not subject to either Section 13 or 15(d) of the Exchange Act (Question 182.05).
- Subsidiaries of Reporting Companies. Private, wholly-owned subsidiaries of reporting companies are eligible issuers under Regulation A+, but the reporting parent is not permitted to be a guarantor or co-issuer (Question 182.06).
- Business Combination Transactions. While Regulation A+ may be used for business combination transactions (such as a merger or acquisition), it may not be used for such transactions conducted on a delayed basis, such as acquisition shelf transactions (Question 182.07).
- Financial Statements of Recently Created Issuers. A recently created issuer may provide a balance sheet in its offering statement as of its inception date, as long as that date is within nine months of the date of filing or qualification of the offering statement, as applicable, and such date of filing or qualification is not more than three months after the issuer reached its first annual balance sheet date (Question 182.08).
- Testing the Waters Using Twitter and Similar Platforms. An issuer can “test the waters” using a platform that limits the number of characters or amount of text that can be included (e.g., Twitter), thereby preventing the inclusion of information required by Securities Act Rule 255, provided, that, (i) including the full text of the required Regulation A+ legends would cause the communication to exceed the limits on the number of characters or amount of text that may be included in the communication; and (ii) the communication contains an active hyperlink to the required statements that otherwise satisfy Rule 255 and, where possible, the electronic communication prominently conveys that important or required information is provided through a hyperlink (Question 182.09).
- Resale of Securities. State securities law registration and qualification requirements are not preempted with respect to resales of securities purchased in a Tier 2 offering. Preemption of state law only applies with respect to primary offerings of securities or secondary offerings by selling stockholders that are completed in compliance with Regulation A+ (Question 182.10).
The Interpretations discussed above are available at the following link: (http://www.sec.gov/divisions/corpfin/guidance/safinterp.htm)
 Under Rule 255, a “test the waters” communication must, among other things, state that no money or other consideration is being solicited or will be accepted if received; that no offer to buy the securities or any part of the purchase price may be received until an offering statement is qualified, and that any offer may be withdrawn or revoked without obligation or commitment of any kind at any time before notice of its acceptance is given after the qualification date; that a person’s indication of interest involves no obligation or commitment of any kind; and, after the public filing of the offering statement, where a copy of the preliminary offering circular may be obtained (if no offering circular is already provided with the communication).