|Benji T. Jones|
- Tier I covers offerings of up to $20 million in a 12-month period, including no more than $6 million of securities sold on behalf of selling security holders; and
- Tier II covers offerings of up to $50 million in a 12-month period (an increase from the current $5 million cap), including no more than $15 million of securities sold on behalf of selling security holders.
- State Preemption: Tier I offerings are subject to the registration and qualification requirements of state law, while Tier II offerings are not. Practically speaking, this means that companies undertaking Tier I offerings would need to file and submit disclosures for review in each state where an offering takes place. Although there is a relatively new coordinated review system in place that could make this process less arduous than in the past, companies undertaking a Tier I offering would nevertheless become subject to additional procedural and substantive requirements imposed by the states.
- Audited Financial Statements: Tier II offerings must be accompanied by audited financial statements, a requirement the SEC did not impose on Tier I offerings.
- Investor Caps: Individual investors who are not accredited investors (as defined under Securities Act Rule 506 for private placements) typically will not be permitted to invest more than 10% of the greater of their annual income or net worth in Tier II offerings. Investors subject to this limitation would be permitted to self-certify to this fact.
- Ongoing Reporting Requirements: Tier II issuers will be required to file scaled annual, semiannual and current reports through EDGAR.