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Facilitating Capital Formation and Expanding Investment Opportunities by Improving Access to Capital in Private Markets

March 10, 2021

A Small Entity Compliance Guide[1]


On November 2, 2020, the U.S. Securities and Exchange Commission (the “Commission”) adopted amendments to facilitate capital formation and increase opportunities for investors by expanding access to capital for small and medium-sized businesses and entrepreneurs across the United States. Specifically, the amendments address certain aspects of the exempt offering framework by: simplifying the ability of issuers to move from one offering exemption to another, setting clear and consistent rules governing offering communications between issuers and investors, increasing offering and investment limits for certain exemptions, and harmonizing certain disclosure requirements and bad actor disqualification provisions. The Commission also revised the confidential information standard applicable to certain exhibit filing requirements.

Who is affected by the amendments?

The amendments affect any domestic or foreign issuer that seeks to rely on the Commission’s exempt offering framework to offer and sell securities without registration under the Securities Act of 1933 (the “Securities Act”).

In addition, the revisions to the confidential information standard applicable to certain exhibit filing requirements affect a variety of entities, including domestic and foreign registrants with offerings registered under the Securities Act or classes of securities registered under the Securities Exchange Act of 1934, Regulation A issuers, and issuers regulated under the Investment Company Act of 1940.

What changes were made by the amendments?

The amendments changed various rules and requirements, including:


The integration doctrine provides an analytical framework for determining whether multiple securities transactions should be considered part of the same offering. This analysis helps to determine whether registration under Section 5 of the Securities Act is required or an exemption is available for the entire offering.

The amendments simplify the integration framework for registered and exempt offerings by adding new Securities Act Rule 152, which provides a general principle of integration and four non-exclusive safe harbors from integration. The Commission also replaced the integration provisions of several Securities Act exemptions with references to Rule 152.

Integration Principle in New Rule 152(a)

General Principle of Integration

If the safe harbors in Rule 152(b) do not apply, in determining whether two or more offerings are to be treated as one for the purpose of registration or qualifying for an exemption from registration under the Securities Act, offers and sales will not be integrated if, based on the particular facts and circumstances, the issuer can establish that each offering either complies with the registration requirements of the Securities Act, or that an exemption from registration is available for the particular offering.

Application of the General Principle to an exempt offering prohibiting general solicitation

Rule 152(a)(1)

The issuer must have a reasonable belief, based on the facts and circumstances, with respect to each purchaser in the exempt offering prohibiting general solicitation, that the issuer (or any person acting on the issuer’s behalf) either:

(i) Did not solicit such purchaser through the use of general solicitation; or

(ii) Established a substantive relationship with such purchaser prior to the commencement of the exempt offering prohibiting general solicitation.

Application of the General Principle to concurrent exempt offerings that each allow general solicitation

Rule 152(a)(2)

In addition to satisfying the requirements of the particular exemption relied on, general solicitation offering materials for one offering that include information about the material terms of a concurrent offering under another exemption may constitute an offer of the securities in such other offering, and therefore the offer must comply with all the requirements for, and restrictions on, offers under the exemption being relied on for such other offering, including any legend requirements and communications restrictions.

Non-Exclusive Integration Safe Harbors in new Rule 152(b)

Safe Harbor 1

Rule 152(b)(1)

Any offering made more than 30 calendar days before the commencement of any other offering, or more than 30 calendar days after the termination or completion of any other offering, will not be integrated with such other offering; provided that, for an exempt offering for which general solicitation is not permitted that follows by 30 calendar days or more an offering that allows general solicitation, the provisions of Rule 152(a)(1) shall apply.

Safe Harbor 2

Rule 152(b)(2)

Offers and sales made in compliance with Rule 701, pursuant to an employee benefit plan, or in compliance with Regulation S will not be integrated with other offerings.

Safe Harbor 3

Rule 152(b)(3)

An offering for which a Securities Act registration statement has been filed will not be integrated if it is made subsequent to: (i) a terminated or completed offering for which general solicitation is not permitted; (ii) a terminated or completed offering for which general solicitation is permitted that was made only to qualified institutional buyers and institutional accredited investors; or (iii) an offering for which general solicitation is permitted that terminated or completed more than 30 calendar days prior to the commencement of the registered offering.

Safe Harbor 4

Rule 152(b)(4)

Offers and sales made in reliance on an exemption for which general solicitation is permitted will not be integrated if made subsequent to any terminated or completed offering.

Rule 152(c) provides a non-exclusive list of factors to consider in determining when an offering will be deemed to be commenced, and Rule 152(d) provides factors to consider in determining when an offering will be deemed terminated or completed. Rule 152 also cautions issuers that the rule may not be used as part of a plan or scheme to evade the registration requirements of the Securities Act.

Generic Solicitations of Interest

The amendments add new Securities Act Rule 241, which permits an issuer, or any person authorized to act on behalf of an issuer, to communicate orally or in writing to determine whether there is any interest in a contemplated exempt offering prior to making a determination as to the exemption it plans to use. The new rule requires such generic testing-the-waters materials, also known as solicitations of interest, to state that:

  • The issuer is considering an offering of securities exempt from registration under the Securities Act, but has not determined a specific exemption from registration the issuer intends to rely on for the subsequent offer and sale of the securities;
  • No money or other consideration is being solicited, and if sent in response, will not be accepted;
  • No offer to buy the securities can be accepted and no part of the purchase price can be received until the issuer determines the exemption under which the offering is intended to be conducted and, where applicable, the filing, disclosure, or qualification requirements of such exemption are met; and
  • A person’s indication of interest involves no obligation or commitment of any kind.

The communication may include a means for a person to indicate interest in a potential offering and an issuer may require such indication to include the person’s name, address, telephone number, and/or email address. The amendments also require that the Rule 241 generic solicitation materials be made publicly available as an exhibit to the offering materials filed with the Commission if a Regulation A or Regulation Crowdfunding offering is commenced within 30 days of the generic solicitation, and that an issuer provide purchasers with the materials if the issuer sells securities under Rule 506(b) within 30 days of the generic solicitation of interest to any purchaser that is not an accredited investor.

Regulation Crowdfunding

The amendments to Regulation Crowdfunding, which provides an exemption from registration for certain securities offerings that solicit relatively small individual investments or contributions from a large number of investors, include:[2]

Maximum Offering Amount of $5 Million. A company issuing securities in reliance on Regulation Crowdfunding is permitted under Rule 100(a)(1) to raise a maximum aggregate amount of $5 million in a 12-month period (before the amendments, the limit was $1.07 million).

Investment Limits. Before the amendments to Rule 100(a)(2), all individual investors were limited in the amounts they were allowed to invest in all Regulation Crowdfunding offerings over the course of a 12-month period. The amendments to Rule 100(a)(2) remove these investment limits for accredited investors.

The amendments also change the calculation method for the investment limits for non-accredited investors to allow them to rely on the greater of their annual income or net worth. For non-accredited investors, if either of an investor’s annual income or net worth is less than $107,000, then the investor’s investment limit is the greater of:

  • $2,200 or
  • 5 percent of the greater of the investor’s annual income or net worth.

If both the non-accredited investor’s annual income and net worth are equal to or more than $107,000, then the investor’s limit is 10 percent of the greater of their annual income or net worth, not to exceed $107,000.

Advertising Rules. Under Rule 204 of Regulation Crowdfunding, an issuer may not advertise the terms of a Regulation Crowdfunding offering except in a notice that directs investors to the intermediary’s platform and includes no more than the information specified in that rule. The amendments revised Rule 204 to clarify that oral communications with prospective crowdfunding investors are permitted once the Form C is filed, so long as the communications comply with the requirements of Rule 204. The amendments also permit an issuer to provide information about the terms of an offering under Regulation Crowdfunding in the offering materials for a concurrent offering without violating Rule 204.

In addition, the definition of the “terms of the offering” is expanded so that it now includes:

  • the amount of securities offered;
  • the nature of the securities;
  • the price of the securities;
  • the closing date of the offering period;
  • the planned use of proceeds; and
  • the issuer’s progress toward meeting its funding target.

Testing the Waters. The amendments add new Rule 206 of Regulation Crowdfunding to allow issuers to “test the waters,” or solicit interest in a potential offering from the general public, orally or in writing prior to filing a Form C, provided that the solicitation materials used include the legends required by rule. The issuer is required to include any Rule 206 solicitation materials with the Form C that is filed with the Commission. Once the Form C is filed, any offering communications are required to comply with the terms of Regulation Crowdfunding, including the Rule 204 advertising restrictions.

Bad Actor Disqualification. Rule 503 of Regulation Crowdfunding includes “bad actor” disqualification provisions that disqualify offerings if the issuer or other “covered persons,” such as the issuer’s officers, directors, or promoters, have experienced a disqualifying event. Disqualifying events include, among other things, being convicted of, or subject to court or administrative sanctions for, securities fraud or other violations of specified laws. The amendments harmonize the disqualification provisions in Regulation Crowdfunding with the corresponding provision in Rule 506(d) of Regulation D by requiring the issuer to determine whether a covered person is disqualified both at the time of filing of the offering document and the time of sale.

Special Purpose Vehicles. The amendments permit the use of certain special purpose vehicles (SPVs) in Regulation Crowdfunding. New Investment Company Act Rule 3a-9 includes conditions for crowdfunding SPVs that are designed to ensure that the SPV acts solely as a conduit for investments in a crowdfunding issuer. The conditions, among other things, seek to provide investors in the crowdfunding SPV with the same economic exposure, voting power, and Regulation Crowdfunding disclosures as if the investors had invested directly in the crowdfunding issuer.

Under the final rules, the crowdfunding issuer and the crowdfunding vehicle are co-issuers under the Securities Act and are required to jointly file a Form C, providing all of the required Form C disclosure with respect to the offer and sale of the crowdfunding issuer’s securities to the crowdfunding vehicle and the offer and sale of the crowdfunding vehicle’s securities to investors.

Regulation D

Regulation D is a series of Securities Act rules that set forth three exemptions from the registration requirements of the Securities Act. The final rules amended Regulation D as follows:

Rule 504 Offering Limit. The aggregate amount of securities that may be offered and sold under Rule 504 of Regulation D is increased from $5 million to $10 million.

Rule 506(b) Disclosure. When non-accredited investors are participating in an offering under Rule 506(b), the issuer conducting the offering must furnish the information required by Rule 502(b), including specified financial statement information, to such non-accredited investors a reasonable time prior to the sale of the securities. The final rules amend the financial information requirements in Rule 502(b)(2) to align with the financial information that issuers must provide investors in Regulation A offerings. Specifically, for Regulation D offerings of $20 million or less, an issuer will provide disclosure as required by paragraph (b) of part F/S of Form 1-A, which applies to Tier 1 Regulation A offerings. For offerings of greater than $20 million, an issuer will provide disclosure as required by paragraph (c) of part F/S of Form 1-A, which applies to Tier 2 Regulation A offerings.

Rule 506(b) Non-Accredited Investor Limitation. In an offering under Rule 506(b), sales may be made only to accredited investors and up to 35 non-accredited investors who meet an investment sophistication standard. In connection with the adoption of the 30-day integration safe harbor (discussed above), the Commission amended Rule 506(b) to specify that where an issuer conducts more than one offering under Rule 506(b), the number of non-accredited investors purchasing in all such offerings in any 90-calendar-day-period would be limited to 35.

Rule 506(c) Reasonable Steps to Verify. Rule 506(c) permits issuers to generally solicit and advertise an unregistered offering, provided that all purchasers in the offering are accredited investors, the issuer takes reasonable steps to verify that purchasers are accredited investors, and certain other conditions in Regulation D are satisfied. Rule 506(c) provides a principles-based method for verification of accredited investor status as well as a non-exclusive list of verification methods.

The final rules add a new item to the non-exclusive list that allows an issuer to establish that an investor that the issuer previously took reasonable steps to verify as an accredited investor remains an accredited investor as of the time of a subsequent sale if the investor provides a written representation that the investor continues to qualify as an accredited investor and the issuer is not aware of information to the contrary. A written representation under this method of verification will satisfy the issuer’s obligation to verify the person’s accredited investor status for a period of five years from the date the person was previously verified as an accredited investor.

Demo Days

The amendments add Securities Act Rule 148 to provide that certain “demo day” communications (communications made in connection with an event sponsored by a group or entity that invites issuers to present their businesses to potential investors with the aim of securing investment) will not be deemed a general solicitation or general advertising. Under the new rule, an issuer will not be deemed to have engaged in general solicitation if the communications are made in connection with an event sponsored by a college, university, or other institution of higher education, a state or local government or instrumentality thereof, a nonprofit organization, or an angel investor group, incubator, or accelerator, provided certain conditions are satisfied, including limitations on the sponsor’s activities, a requirement that the advertising for the event not reference any specific offering of securities by the issuer, and limits on the information conveyed at the event regarding the offering of securities by or on behalf of the issuer. The new rule also includes additional limitations for events that permit virtual participation.

Regulation A

Regulation A establishes two tiers of offerings that are exempt from registration under the Securities Act. Issuers may elect to conduct a Regulation A offering pursuant to the requirements of either Tier 1 or Tier 2. The final rules amend several provisions of Regulation A, including:

Offering Limit. The final rules amend Rule 251(a) to increase the Tier 2 offering limit from $50 million in a 12-month period to $75 million in a 12-month period, including no more than $22.5 million offered on behalf of selling securityholders that are affiliates of the issuer (increased from $15 million). The Tier 1 offering limit was not amended and remains $20 million in a 12-month period, including no more than $6 million offered on behalf of selling securityholders that are affiliates of the issuer.

Filing Requirements. The amendments simplify certain Regulation A filing requirements to establish more consistency with registered offerings. These include:

  • Permitting issuers to file redacted material contracts and plans of acquisition, reorganization, arrangement, liquidation, or succession as exhibits without applying for confidential treatment, if the issuer customarily and actually treats that information as private or confidential and if the omitted information is not material;
  • Permitting issuers to redact information that would constitute a clearly unwarranted invasion of personal privacy in any of the exhibits listed in Item 17 of Form 1-A;
  • Permitting issuers to make documents previously submitted for non-public review by the staff and related, non-public correspondence available to the public via EDGAR, instead of requiring such materials to be filed as exhibits to a publicly filed offering statement; and
  • Permitting issuers to incorporate previously filed financial statements by reference into a Regulation A offering circular, subject to certain requirements set forth in General Instruction III(a)(2) of Form 1-A.

Eligibility Criteria. Regulation A is available only to companies organized in and with their principal place of business in the United States or Canada, and that meet certain other eligibility criteria set forth in Rule 251(b), such as having filed all reports required to be filed pursuant to Rule 257 (typically Tier 2 periodic and current reports) during the two years before the filing of a Regulation A offering statement (or for such shorter period that the issuer was required to file such reports). The final rules amend the eligibility criteria in Rule 251(b) to also require that Exchange Act reporting companies have filed all reports required by Section 13 or 15(d) of the Exchange Act in the two-year period preceding the filing of a Regulation A offering statement (or for such shorter period that the issuer was required to file such reports).

Bad Actor Disqualification. Like the amendment to Regulation Crowdfunding described above, the final rules amend Rule 262(a) to require an issuer to determine whether a covered person is disqualified both at the time of filing of the offering statement and the time of sale.

Confidential Standard for Exhibit Filing Requirements

Under rules adopted in 2019,[3] registrants are allowed to omit confidential information in material contracts and certain other exhibits pursuant to Items 601(b)(2) and 601(b)(10) of Regulation S-K, Item 1.01 of Form 8-K, Form 20-F, and investment company registration forms, as applicable, without submitting a confidential treatment request to the Commission, so long as certain requirements are met. The final rules replace the existing standard with one that permits information to be redacted from material contracts if it is the type of information that the issuer both customarily and actually treats as private and confidential, and which is also not material. As noted above, this standard will also apply in connection with the redaction of information from exhibits to Regulation A filings.

What are the compliance dates of the amendments?

The amendments are effective March 15, 2021, except for certain temporary regulatory relief for Regulation Crowdfunding issuers, which is effective from January 14, 2021 to March 1, 2023.

Other Resources

The adopting release for these amendments can be found on the Commission’s website at

The Commission’s disclosure forms can be accessed on the agency’s website at

Contacting the SEC

The Commission’s Division of Corporation Finance is happy to assist small companies and others with questions regarding the amendments. You may contact the Division for this purposes at (202) 551-3500 or at The Commission’s Division of Investment Management’s Chief Counsel’s Office is also available to assist small entities and others with questions regarding the rule amendments. You may contact the Office for this purpose at 202-551-6825 or

Questions on other Commission regulatory matters concerning small companies may be directed to the Division’s Office of Small Business Policy at (202) 551-3460 or

[1] This guide, dated as of March 10, 2021, was prepared by the staff of the U.S. Securities and Exchange Commission as a “small entity compliance guide” under Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996, as amended. The guide summarizes and explains the rules adopted by the Commission, but is not a substitute for any rule or form. Only the rule or form itself can provide complete and definitive information regarding its requirements.

[2] On May 4, 2020, the Commission adopted temporary final rules under Regulation Crowdfunding to facilitate capital formation for small businesses impacted by COVID-19. See Temporary Amendments to Regulation Crowdfunding, Release No. 33-10781 (May 4, 2020), available at These temporary final rules were subsequently extended and applied to offerings initiated under Regulation Crowdfunding between May 4, 2020, and February 28, 2021. See Temporary Amendments to Regulation Crowdfunding; Extension, Release No. 33-10829 (Aug. 28, 2020), available at

The amendments extend for an additional 18 months the temporary relief providing an exemption from certain Regulation Crowdfunding financial statement review requirements.

Specifically, an issuer in an offering or offerings initiated between March 1, 2021 and August 28, 2022, that, together with all other amounts sold in Regulation Crowdfunding offerings within the preceding 12-month period, have, in the aggregate, a target offering amount of more than $107,000, but not more than $250,000, may provide financial statements of the issuer certified by the principal executive officer, in accordance with Rule 201(t)(1), instead of the financial statements reviewed by a public accountant that is independent of the issuer that would otherwise be required by Rule 201(t)(2). This temporary relief applies only if reviewed or audited financial statements of the issuer are not otherwise available. The amendments also extended Rule 100(b)(7)’s enhanced eligibility requirements for the relief and the requirement to provide prominent disclosure about the issuer’s reliance on the temporary rule.

[3] See FAST Act Modernization and Simplification of Regulation S-K, Release No. 33-10618 (Mar. 20, 2019), available at

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