Two Regulation A tiers trade audits for state review

The record

The SEC's 2015 rules implementing the JOBS Act's expanded Regulation A, adopted in Release No. 33-9741 and effective 19 June 2015, created two tiers of exempt offerings. As adopted, Tier 1 covered offerings "of up to $20 million," including no more than $6 million sold on behalf of affiliated selling securityholders, and Tier 2 covered offerings "of up to $50 million," including no more than $15 million for affiliated selling securityholders. An issuer raising $20 million or less "could elect to proceed under either Tier 1 or Tier 2." The SEC's current Regulation A guidance page, reflecting the rule as retrieved on 16 September 2026, now states the Tier 2 ceiling at $75 million, the product of a later increase to the original 2015 figure.

What the documents establish

The 2015 release draws the operative distinctions in the rule's own terms, not a law firm's gloss on it. Tier 2 issuers must include financial statements "audited in accordance with either" AICPA or PCAOB auditing standards; Tier 1 issuers face no audit requirement, only the same two-fiscal-year balance sheet disclosure both tiers share. Tier 2 issuers must "file electronically with the Commission on EDGAR annual and semiannual reports, as well as current event reports" for as long as the reporting obligation continues; Tier 1 issuers instead file a one-time Form 1-Z exit report within 30 days of an offering's termination or completion, with no ongoing periodic reporting regime. The release is explicit that the preemption of state securities-law registration and qualification requirements applies only "for Tier 2 offerings"; it does not extend that preemption to Tier 1, so a Tier 1 issuer remains subject to state blue-sky review state by state.

The operating read

Choosing Tier 1 over Tier 2 for a smaller raise is not simply a matter of the dollar ceiling; it trades a lighter, audit-free disclosure package and no ongoing SEC reporting against having to clear state securities regulators in every state where the offering is made. This is an editorial reading beyond the release's own text: an issuer planning offers concentrated in a small number of states might find Tier 1's state-by-state review manageable, while an issuer planning a broad, many-state or nationally advertised offering is likely to find Tier 2's audit and periodic-reporting costs cheaper than clearing blue-sky review everywhere at once.

What to check before you decide

Before choosing a Regulation A tier for an offering, check:

• Does the planned raise, including any amount for selling securityholders, fit within the tier's current ceiling, and has that ceiling changed since a template or precedent document was drafted?
• Can the company's financial statements be audited to the required standard on the timeline the offering needs, if Tier 2 is chosen?
• In how many states will the offering actually be made, and does that favor Tier 2's state-law preemption or make Tier 1's state-by-state review tolerable?

This entry summarizes what the Commission's 2015 adopting release and its current guidance page state about the two tiers; it is not a recommendation for any specific offering.