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REGULATION A+ TOKENIZED OFFERINGS

Summary
Regulation A+ Tokenized Offerings
Service Type
Regulation A+ Tokenized Offerings
Provider Name
Dilendorf Law Firm,New York,New York-10004,
Telephone No.212.457.9797
Area
Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming
Description
Regulation A+ Tokenized Offerings | Offerings of securities, including tokenized securities (STOs), exempted from registration under Regulation A+

Dilendorf Law Firm guides clients through offerings of securities, including tokenized securities (STOs), exempted from registration under Regulation A+ (Regulation A amended as a part of the JOBS Act or “Reg A+” for short).

Requirements for Reg A+ tokenized offerings are relaxed as compared to a registered IPO, still Reg A+ allows U.S. and Canadian companies to publicly advertise investment opportunities and raise up to $75 million in a 12-month period from an unlimited number of unaccredited investors. 

Also this exemption provides immediate liquidity to investors, meaning that tokenized Reg. A+ securities can be traded on day 1 of its issuance on regulated Alternative Trading Systems (ATS) both in the US and overseas.

For these reasons, Reg A+ offering is often referred to as a mini-IPO.   Tokenized Reg A+ offering is an excellent fundraising tool for real estate developers and operators, startups and existing companies.

ATTORNEYS' EXPERIENCE

ATTORNEYS' EXPERIENCE

Advised a Canadian issuer of security tokens raising funds for development of green energy powered cryptocurrency mining operations on the availability of Reg A+ exemption from securities registration in the U.S.

ATTORNEYS' EXPERIENCE

Advised a foreign developer of digital-distribution blockchain-powered gaming platform on the possibility of incorporating a U.S. issuer for the purposes of conducting an STO under Reg D and Reg A+, and on the SEC pre-qualification process.

ATTORNEYS' EXPERIENCE

Advised a newly incorporated U.S. issuer on the availability and process of the Reg A+ offering of tokenized preferred equity.

ATTORNEYS' EXPERIENCE

Representing a national real estate developer with creating a tokenized Reg. A+ offering

Helping Clients Navigate Through Reg A+ Requirements and Challenges

Reg A+ tokenized issuer must be a U.S. or Canadian company. Securities qualifying for a Reg A+ offering are limited to equity and debt securities, including warrants, convertible equity securities and guarantees of such securities.

Reg A+ provides for two offering tiers:

  • Tier 1 – for offerings of up to $20 million in a 12-month period. Tier 1 does not require audited financial statements but is subject to the state requirements (“blue sky laws”) in every state where the securities are offered or sold.
  • Tier 2 – for offerings of up to $75 million in a 12-month period. The company must file audited financial statements and ongoing post-offering reports but the state “blue sky laws” are preempted. Tier 2 contains an additional limitation on the amount of securities non-accredited investors can purchase – 10% of the investor’s annual income or net worth.

Reg A+ offering requires filing of an offering statement on the Form 1-A with the SEC and going through the qualification process until the SEC clears the offering by issuing a “notice of qualification.”

The primary disclosure document to be prepared for the Reg A+ offering is called an “offering circular.”

The biggest challenge of a Reg A+ offering of digital or tokenized securities is the significantly heightened SEC scrutiny during the pre-qualification process caused by novel implications of blockchain technology and digital nature of the securities.

Thus, issuers should be prepared to address numerous SEC’s comments and disclose to investors all the peculiarities of tokenized securities and associated risks, including related to the issuance, transferring and secondary trading. Issuers should consider conducting a private placement to accredited investors under Regulation D and/or a crowdfunding offering under Regulation CF while the SEC’s Reg A+ clearance is pending.

Defining the Scope of Reg. A+ STO

The scope of Reg. A+ STO is very broad and may include, for example:

  • Tokenized traditional securities, like shares of stock in a corporation;
  • Tokenized fund interests, including venture capital and real estate funds;
  • Real estate;
  • Diamonds or precious metals;
  • Works of fine art, luxury cars and boats;
  • Interests in a limited partnership or other business entity;
  • Profit-sharing right in a business entity, etc.

Guiding Clients Through Reg A+ Offering and SEC Pre-Qualification Process

Our lawyers will guide you through preparation, filing and pre-qualification process of a Reg A+ tokenized offering, including:

  • Structuring the offering and the security token terms.
  • Incorporating a new issuer.
  • Conducting legal due diligence of an existing ownership structure for the issuer to be eligible for Reg A+.
  • Drafting offering circular, preparing and filing Form 1-A with the SEC, responding to comments and working closely with the SEC during the pre-qualification process.
  • Advising throughout “testing the waters” and in relation to solicitation and marketing materials.
  • Advising on operational issues in relation to broker-dealers, crowdfunding platforms and regulated exchanges (alternative trading platforms).
  • Providing post-offering legal support of ongoing compliance, secondary trading, capital table management and investor relations.

Tokenized Reg. A+ Offerings for Real Estate

Real-estate tokens will virtually always qualify as securities under state and federal law. As such, they must be registered with the Securities and Exchange Commission (SEC) or satisfy an exemption from registration.

Failure to satisfy this requirement can result in substantial civil penalties and give investors a right to rescind their purchases and receive a full refund.

Of course, most issuers will not seek to register with the SEC, but structure their security token offerings as exempt transactions. In doing so, they will choose from among several available exemptions, including Regulation CF, Regulation D, Regulation S and Regulation A+.

These regulations impose different requirements on the offering, from limitations on who may invest, to limits on the amounts raised, to resale restrictions on investors.

As discussed above, using Regulation A+ exemption, a company can raise up to $75M in a 12-month period and tokens can be immediately traded on regulated ATS platforms on day 1 after the token issuance.

Reg A+ Related Resources:

Summary
Regulation A+ Tokenized Offerings
Service Type
Regulation A+ Tokenized Offerings
Provider Name
Dilendorf Law Firm,New York,New York-10004,
Telephone No.212.457.9797
Area
Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming
Description
Regulation A+ Tokenized Offerings | Offerings of securities, including tokenized securities (STOs), exempted from registration under Regulation A+

For more information about Regulation A+ Tokenized Offerings,

please contact Dilendorf Law Firm by sending an email or calling us at 212.457.9797

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