Reg A qualification

Qualification is the SEC's clearance of a Regulation A offering statement, the point at which the company may begin selling. It is the Reg A counterpart of a registration statement being declared effective. The SEC issues a notice of qualification after its staff have finished reviewing the Form 1-A and the company has answered their comments. Qualification is not an endorsement: the SEC does not pass on the merits of the offering, and saying or implying that it approved the investment is prohibited.

How an offering gets there

1. The company files the Form 1-A on EDGAR, or first submits a draft for nonpublic review. A draft and its correspondence must be filed publicly at least 21 calendar days before qualification.
2. SEC staff send a comment letter. The company responds and files an amendment. This repeats until the staff have no further comments.
3. The company asks for qualification on a chosen date, and the SEC issues the notice. An offering statement never becomes qualified automatically by the passage of time.
4. For a Tier 1 offering, the company must also clear the states where it will sell before selling there, since Tier 1 is not preempted from state review.

How long this takes depends on the quality of the filing and how fast the company answers comments. Several months is common, and the date cannot be scheduled precisely.

What changes at qualification

• Sales may begin, subject to the delivery conditions of Rule 251(d), including the offering-circular delivery rules.
• Testing the waters under Rule 255 ends. Communications become offers in a qualified offering: written offers must be accompanied or preceded by the current offering circular.
• Public advertising opens up. A qualified Reg A offering may be advertised broadly, within what the offering circular supports.
• Reservations become conversions. People who gave indications of interest may now be invited to invest; their indications were never binding, and nothing collected before qualification converts to a sale on its own.

A material change after qualification is handled by a supplement to the offering circular or, for a fundamental change, a post-qualification amendment that must itself be qualified.

Why it matters to marketing

Qualification is the single date that moves a Reg A campaign from building a list to selling, and it is the date the company controls least. The practical answer is to plan for readiness rather than a launch date: the list, the creative, the tracking, and the investment flow finished and waiting, so the offering opens to a warm audience within days of the notice.

Further reading

• What is Reg A+
• Reg A+ testing the waters: Rule 255 before and after Form 1-A
• Testing the waters vs a live offering
• Mini-IPO is a misnomer for Reg A

This page is general information about securities rules, not legal advice. The review timeline and what a company may say at each stage are questions for its securities counsel.