what is regulation a 
under u s securities laws an offering or sale of a security must be registered with the securities and exchange commission sec or meet an exemption regulation a is an exemption from registration requirements instituted by the securities act of 1933 that applies to public offerings of securities companies utilizing the exemption are given distinct advantages over companies that must fully register however there are different tiers depending on the size of the company and companies must still file an offering statement with the sec the offering must also give buyers documentation with the issue similar to the prospectus of a registered offering understanding regulation atypically the advantages offered by regulation a offerings make up for the stringent documentation requirement among the advantages provided by the exemption can be streamlined financial statements without audit obligations three possible format choices to use to arrange the offering circular and no requirement to provide exchange act reports until the company has more than 500 shareholders and 10 million in assets updates to regulation a in 2015 allow companies to generate income under two different tiers it s essential for investors interested in purchasing securities sold by companies utilizing regulation a to understand which tier the security was offered every company must indicate the tier under which the security falls on the front of its disclosure document or offering circular this is important because the two tiers represent two different types of investments regulation a tier 1 vs tier 2companies that use the reg a exemption can sell their securities utilizing two different tiers each with its own requirements however with both tiers the issuer must file an offering statement with the sec including an offering circular which serves as the disclosure document for investors 1under tier 1 a company is permitted to offer a maximum of 20 million in a 12 month period the issuing company must also file offering statements with the sec which need to be qualified by state regulators in the states in which the company plans on selling the securities however companies issuing offerings under tier 1 do not have ongoing reporting requirements but are required to issue a report on the final status of the offering under tier 2 companies can offer up to 75 million in a 12 month period companies offering securities under tier 2 are required to produce audited financial statements and file continual reports including its final status however tier 2 issuers are not required to register or qualify their offerings with state securities regulators but still must file their offering with the sec tier 2 offerings have additional requirements such as limitations on the amount of money a non accredited investor may invest in a tier 2 security 1