On June 19, 2015, real estate developers have a new avenue for raising funds. They no longer have to knock on banks doors and pay interest and provide personal guarantees, sign commercial documents pledging their homes, real estate or their business equipment, comply with Regulation D and Rule 506, or use their own finances. They can issue stock or partnership interests directly to the public without every investor having to be “accredited.”
The JOBS Act directed the SEC to adopt rules adding a class of securities exempt from the registration requirements of the Securities Act for offerings of up to $50 million of securities within a 12-month period. In March of 2015, the SEC finally released its final rules to comply with the JOBS Act.
The new rule is commonly referred to as Regulation A+ and divides offerings into two tiers: Tier 1, for securities offerings up to $20 million; and Tier 2, for offerings up to $50 million. Tier 1 offerings are not fully exempt offerings and they still remain subject to registration under state securities laws. Therefore, Tier 2 offerings are the subject of this article.