Form 10 Listings / Shells
The JOBS Act (“the Act”) was signed into law in 2012 to provide companies more accessible access to investor capital in America. On June 19, 2015, the SEC issued new final regulations to implement Title IV of the Act—Regulation A+. Regulation A+ offerings (“Reg A+ offerings”), also called mini-IPOs, are exempted from many of the registration requirements of the Securities Exchange Act of 1934. Companies that undergo a Reg A+ offering can raise capital from both accredited and non-accredited investors with much smaller fees than a traditional IPO. These mini-IPOs (which exhibit many similarities to crowdfunding) are very new in the markets. Still, they show great potential as an alternative form of equity financing for small- to mid-size growth-stage companies. They give unprecedented access to both Main Street and Wall Street investors.
Regulation A+ Basics
Tier 1. Securities offerings of up to $20 million in 12 months
Tier 2. Securities offerings of up to $50 million in 12 months
Like an IPO, Reg A+ offerings create publicly traded shares available to both individual and professional investors. However, Reg A+ offerings are primarily marketed toward retail investors—typically the company’s existing customer base—rather than institutional investors, who generally focus on a traditional IPO. This crowdfunding focus, along with less-stringent regulatory requirements, makes Reg A+ offerings an attractive option for young companies looking for liquidity and increased customer engagement with their brand.
What is a shell company?
A shell company is an issuer with no or nominal operations and either no or little assets, assets consisting solely of cash and cash equivalents or investments comprised of any amount of cash and cash equivalents and nominal other assets.