How Regulation A+ Works: Form 1-A to SEC Qualification

A Regulation A+ offering moves from a company’s decision to raise capital to the first sale of securities through a defined sequence: prepare an offering statement on Form 1-A, file it with the SEC through EDGAR, respond to staff comments, wait for the SEC to qualify the offering statement, and only then accept investor money. The process resembles a registered offering in outline but uses a lighter disclosure format. This guide walks through each stage, the documents involved and the rules that govern them, using the SEC’s Regulation A guidance and the text of Rules 251 to 263 in 17 CFR Part 230.

For a comparison of the two offering levels before you start, see our guide on Regulation A Tier 1 versus Tier 2. This article is educational and is not legal advice.

In brief

The offering statement is filed on Form 1-A, which has three parts: a fillable notice, the offering circular with financial statements, and exhibits.
Sales can begin only after qualification. Offers, including testing the waters, are allowed earlier within limits.
Issuers that have not sold under a qualified Regulation A or registered offering before may submit a draft for non-public review.
No SEC filing fee is payable for Form 1-A under Rule 252(b).
After qualification, Tier 1 issuers file an exit report; Tier 2 issuers file ongoing reports.

Stage 1: Confirm eligibility and choose a tier

Before drafting, the issuer confirms that it can use Regulation A under Rule 251(b): it must be organized in, and have its principal place of business in, the United States or Canada; it cannot be an investment company, a blank-check type development stage company or an issuer of fractional mineral rights; it must be current in any required reports; and neither it nor covered persons may be subject to a disqualifying event under Rule 262.

The issuer then decides on Tier 1 or Tier 2. Tier 2 requires audited financial statements and ongoing reports, so an issuer choosing it usually engages an independent auditor at this stage. Auditors must meet the independence standards that apply, and Form 1-A requires that audits follow either U.S. GAAS or PCAOB standards.

Stage 2: Assemble the team and the documents

A typical Regulation A offering involves:

Securities counsel, who prepares the offering statement, advises on exemptions and state law, and coordinates the review.
An independent auditor, for Tier 2 and for any issuer that has audited statements.
A transfer agent, which Tier 2 issuers need to rely on the conditional exemption from Section 12(g) of the Exchange Act, according to the SEC’s guidance.
A broker-dealer or placement agent, if the offering will be sold through one.
An escrow or payment processor, depending on how investor funds are handled before closing.
An EDGAR filer, meaning the company must have EDGAR access codes before it can file.

Stage 3: Prepare Form 1-A

The SEC’s guidance describes the three parts of Form 1-A.

Part I is an XML-based fillable form that serves as a notice of basic information about the issuer and the proposed offering and helps confirm the exemption is available. It covers issuer information, eligibility certifications, the bad actor certification under Rule 262, a summary of the offering, the jurisdictions where securities will be offered and unregistered securities issued or sold within the last year.

Part II is the offering circular, the main disclosure document investors receive. The issuer may use one of three narrative formats: the Offering Circular format, a simplified and scaled version of the disclosure required in registered offerings; the Part I of Form S-1 format; or, for real estate companies that qualify, the Part I of Form S-11 format. Part II also contains the financial statements, which must follow Part F/S of Form 1-A.

Part III consists of the signatures, the exhibit index and the exhibits. Required exhibits include the underwriting agreement, charter and bylaws, instruments defining the rights of securityholders, the subscription agreement, material contracts, escrow agreements, consents, the legality opinion, any testing-the-waters materials and the appointment of an agent for service of process.

Financial statements

Part F/S requires balance sheets and related statements for the two previous fiscal year ends, or for the time the issuer has existed if shorter. The SEC’s guidance says financial statements in the filing must be dated not more than nine months before the date of non-public submission, filing or qualification, and interim statements, when required, must cover at least six months. Tier 2 statements must be audited; Tier 1 statements need not be audited unless the issuer already has audited statements prepared for another purpose.

Pricing information

Rule 253(b) lets a qualified offering circular omit some price-dependent information if the securities are offered for cash and the cover page includes a bona fide estimate of the range of the maximum offering price and the maximum number of shares. The range may not exceed $2 where the upper end is $10 or less, or 20 percent where the upper end is above $10, and the upper end is used to determine the aggregate offering price under Rule 251(a).

Stage 4: Optional non-public submission

Under Rule 252(d), an issuer whose securities have not previously been sold under a qualified Regulation A offering statement or an effective Securities Act registration statement may submit a draft offering statement to the SEC for non-public review by the staff. The draft must be substantially complete for the review to begin, per the SEC’s guidance. The initial draft, all non-public amendments and the related correspondence must be publicly filed on EDGAR at least 21 calendar days before qualification.

This route lets an issuer receive and answer staff comments before its first public filing, which some issuers prefer for confidentiality reasons.

Stage 5: Public filing and staff review

The issuer files the offering statement on EDGAR. It must be signed by the issuer, its principal executive, financial and accounting officers and a majority of the board or other governing body, as Rule 252(c) specifies. Rule 252(b) states that no fee is payable to the SEC for submitting or filing an offering statement or amendment on Form 1-A.

The SEC’s Division of Corporation Finance reviews the filing and may issue comment letters on disclosure, accounting and eligibility. The issuer responds by amending the offering statement. Amendments are numbered consecutively and signed in the same way as the original filing under Rule 252(f). There is no fixed time for the staff review; it depends on the quality of the filing and the number of rounds.

Stage 6: Offers before qualification

Under Rule 251(d)(1), no offer may be made until an offering statement has been filed, except for the solicitations of interest that Rule 255 allows. After filing but before qualification, the issuer may:

Make oral offers.
Make written offers that meet Rule 254, which requires a document captioned “Preliminary Offering Circular” with a prescribed legend stating that the securities may not be sold and offers to buy may not be accepted before qualification.
Use Rule 255 solicitation of interest materials. Our guide on testing the waters under Regulation A covers those in detail.

Where the issuer is not already an SEC reporting company, Rule 251(d)(2)(i)(B) requires delivery of a preliminary offering circular at least 48 hours before a sale to any person who indicated interest before qualification, including persons who responded to testing-the-waters materials.

Stage 7: Qualification

Sales may begin only when the offering statement is qualified. The SEC’s guidance explains that the Division of Corporation Finance has delegated authority to declare offering statements qualified through a “notice of qualification,” which is analogous to a notice of effectiveness in a registered offering. Rule 252(e) provides that an offering statement and any amendment can be qualified only at such date and time as the Commission may determine.

Qualification does not mean the SEC has approved the merits of the securities or verified the disclosure. It means the staff has completed its review process and the offering statement meets the conditions for qualification.

Stage 8: Selling securities

After qualification, the issuer may sell. Several conditions apply:

Delivery of the final offering circular. Under Rule 251(d)(2)(ii), a seller must deliver a copy of the final offering circular not later than two business days after the completion of a sale, and the rule allows a notice with the URL where the circular can be found to satisfy the delivery requirement.
Investment limits in Tier 2. Unless the securities will be listed on a national exchange upon qualification, a non-accredited purchaser is subject to the 10 percent limit in Rule 251(d)(2)(i)(C).
State requirements. Tier 1 offerings need state registration or qualification; Tier 2 offerings do not but remain subject to state antifraud authority and possible filing fees.
Continuous offerings. Rule 251(d)(3) permits continuous or delayed offerings in specified cases, including securities offered on a continuous basis that begins within two calendar days after qualification and may continue for more than 30 days, with the securities offered and sold only if not more than three years have passed since initial qualification.
Updating the offering statement. For ongoing offerings, Rule 252(f)(2) requires a post-qualification amendment at least every 12 months after qualification to include current financial statements, and also when facts or events represent a fundamental change in the information in the offering statement.

Stage 9: After the offering

Tier 1 issuers file a Form 1-Z exit report within 30 calendar days after the offering ends (Rule 257(a)). Tier 2 issuers file Form 1-K annually, Form 1-SA semiannually and Form 1-U for specified current events, and may also have an exit report requirement. The SEC’s guidance lists the Form 1-K deadline as 120 calendar days from fiscal year-end, the Form 1-SA deadline as 90 calendar days after the first six months of the fiscal year and the Form 1-U deadline as four business days after a triggering event.

A worked timeline, with illustrative sequencing

The following uses a made-up Tier 2 issuer and shows sequencing, not typical durations.

The company decides to raise capital and engages counsel and an auditor.
It finishes audited financial statements and drafts the offering circular.
It submits a draft offering statement for non-public review.
It receives staff comments and files non-public amendments.
At least 21 calendar days before it expects qualification, it publicly files the draft, its amendments and the correspondence, along with the full offering statement.
It uses Rule 255 materials and a Rule 254 preliminary offering circular to gauge interest.
The staff clears comments, the issuer asks for qualification and the SEC issues a notice of qualification.
Sales begin and the final offering circular is delivered.
Annual, semiannual and current reports follow.

Common misconceptions

“Filing Form 1-A lets you sell right away.” Sales wait for qualification.
“Qualification is automatic.” An offering statement can be qualified only at the date and time the Commission determines under Rule 252(e).
“Confidential means never public.” Non-public draft submissions become public on EDGAR at least 21 days before qualification.
“Tier 2 issuers have no ongoing duty.” They file periodic reports and must keep current.
“Disclosure can be skipped for small raises.” The antifraud provisions apply regardless of size.

FAQ

How long does the Regulation A process take?

There is no fixed timetable. It depends on preparation, audit readiness, the staff review and the number of comment rounds. The only fixed period in the rules for this stage is the 21-day public filing window for non-public submissions.

Can a company sell securities while its Form 1-A is under review?

No. Sales must wait until the offering statement is qualified. Before then, the issuer may make permitted offers, such as oral offers, preliminary offering circular offers and Rule 255 solicitations, but may not accept money or commitments.

Does Regulation A require an underwriter?

No. Rule 251(d)(2)(ii) addresses issuers selling without an underwriter or dealer. Many issuers still use broker-dealers. Broker-dealer use is a business and regulatory decision, not a Regulation A requirement.

What is an offering circular?

It is the Part II disclosure document in Form 1-A. It describes the business, risks, use of proceeds, management, securities and financial statements, and investors receive it before or with their purchase.

Where do I file Form 1-A?

On the SEC’s EDGAR system. The SEC’s guidance explains that Part I is an XML-based form and Parts II and III are text attachments.

What happens if facts change after qualification?

The issuer must file a post-qualification amendment at least every 12 months for ongoing offerings, and also when facts or events represent a fundamental change, under Rule 252(f)(2).