By Mark Roderick CrowdFunding Beat  Sr. contributing editor and crowdfunding attorney with Flaster/Greenberg PC.

“How long will it take?” That’s one of the two questions I’m asked most often about Regulation A.

The answer is that if everything goes smoothly, it should take about 20 – 24 weeks from the day an issuer decides to raise money using Regulation A until it begins selling securities. Every company is different, of course, and lots of things can delay the process, but 20 – 24 weeks is a good rule of thumb.

With this Regulation A Timeline, I hope to provide issuers and their advisors with a framework for conducting a Regulation A offering, with tasks and milestones. Three notes:

• Don’t try to view this on your phone! There’s a lot to cover.
• As you’ll see, there’s a lot to do in the first few weeks. The more thorough the attention given to the earliest tasks, the more smoothly the process will roll out.
• By definition, this Timeline is from the perspective of the lawyer. Each member of the team – the accountant, the escrow agent, etc. – will have a separate timeline, all within the same 20 – 24 week framework.

What is the other question I’m asked most often about Regulation A? You guessed it. I’ll cover assembling the team and the cost of Regulation A in another post.

The JOBS Act created three flavors of Crowdfunding:

• Title II Crowdfunding, which allows issuers to raise an unlimited amount of money from an unlimited number of investors using unlimited advertising – but is limited to accredited investors.
• Title III Crowdfunding, which allows issuers to raise up to $1 million per year from anyone, including non-accredited investors.
• Title IV Crowdfunding, which modified the old Regulation A and is sometimes referred to as Regulation A+.

Quick Summary of Regulation A

• Raise up to $50 million per year for each issuer
• Raise money from both accredited and non-accredited investors
• Register with the SEC
• Takes about five months, start to finish
• No State-level registration
• Shares freely tradeable from day one
• Sales by existing shareholders
• Regulation A shareholders not counted toward Exchange Act limits for full reporting
• Mini-IPO, but with much lower cost

Two Tiers

Theoretically, there are two “tiers” under Regulation A:

Because of the exemption from State registration, most companies will choose Tier Two.

Companies That Cannot Use Regulation A

Where Regulation A Makes the Most Sense

• Pools of high-quality real estate assets, especially REITs
• High quality assets in inefficient markets
• Sexy companies (companies with high social-media followers or potential)

Additional Resources

• Regulation A+ Primer
• Regulation A Timeline
• Text of Regulation A and SEC Adopting Release

Markley S. Roderick concentrates his practice on the representation of entrepreneurs and their businesses. He represents companies across a wide range of industries, including technology, real estate, and healthcare.

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