Reg A Do you have to comply with blue sky laws?

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Reg A – Do You Have to Comply

with the State Blue Sky Laws


Under Reg A, Tier 1 issuers must

comply with state securities laws, the “Blue Sky” laws

Tier 1 deals are still subject to state merit review which may limit dilution, bar unsound financial

condition, bar unequal voting rights, stop preferred stock, and prohibit negative

net worth

These merit review

limits and others may stop you from selling in particular

states

Having to qualify your Tier 1 deal in many states is expensive and

time consuming

The North American

Securities Administrators Association is

trying to implement coordinated state

review

For Tier 2 deals, the states can still investigate fraud and require you to file your SEC filings with them

and pay a fee

You can make your Tier 1 deal a Tier 2 deal by complying

with the Tier 2 rules even if you

are not raising over $20 million

Tier 1 deals do not have

to have audited financial statements, file annual audited

financial statements with SEC, and are not subject to all the Tier 2 ongoing reporting

State securities regulation is an

important consideration in a

Reg A offering

Compliance with Blue Sky laws can mean much

time and expense

Reportedly an issuer seeking state

registration in 50 states would incur

$80,000 to $100,000 in legal

fees alone

Even in a Tier 2 offering, you may still have to make

a simple form filing and pay fees in some

states


Want to know more? – email me at John.Lux@ Securities-Law.info

(240) 200-4529

John E. Lux was in

the top 5% of authors on

Slideshare in 2014 and has

been quoted by Bloomberg as an expert on reverse

mergers


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Disclaimer

This is not legal or investment advice of any kind

Seek competent advice from qualified attorneys and investment bankers

Your situation may vary

The more you know about finance and business, the more you can profit

Business

Reg A Do you have to comply with blue sky laws?