What states require Issuer Dealer and Issuer Agent forms for Regulation A Tier 2 Offerings?

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Tier 2 Offerings

Regulation A Tier 2 is a great tool for small companies to raise capital. However, depending on the state in which you are raising funds, there may be additional forms that need to be filed in order to complete the offering. There are several states that require Issuer Dealer and/or Issuer Agent forms for Regulation A Tier 2 Offerings.

What Are Tier 2 Offerings?

There are two types of Regulation A offerings: Tier 1 and Tier 2. They are both designed to make it easier for smaller companies to access capital markets by providing exemptions from certain registration requirements. The key difference between the two is the amount of money that can be raised; with a Tier 1 offering, you can raise up to $20 million in any 12-month period, while with a Tier 2 offering, you can raise up to $75 million.

In addition to the higher fundraising amount, Regulation A Tier 2 Offerings also have additional requirements such as issuer eligibility and ongoing reporting obligations that must be met for the entire duration of the offering. These requirements are designed to ensure that investors receive adequate disclosure regarding their investment and that the company is adhering to all applicable federal laws.

What are Issuer Dealer Registration Forms?

Issuer dealer registration forms are typically required in states that have their own set of securities laws. These documents are generally filed with the state and serve as an indication to potential investors that the issuer is registered as a dealer within that particular jurisdiction. It also includes information about the types of securities being offered, the fees associated with them, and other important details.

Why would a company register as an issuer dealer instead of opting for using a broker-dealer? Well, the amendments to Regulation A Tier 2 allow issuers to raise funds from both accredited and non-accredited investors. This means that companies no longer have to rely on the traditional broker-dealer model to complete their offering. There are many benefits to not using a broker-dealer, including:

  • Cost savings: Companies can significantly save on costs associated with the broker-dealer model.
  • Faster time to market: Companies have more control over their own timeline and can move more quickly to market.
  • More control: Companies have the ability to maintain control over their offering process, including setting terms related to pricing, fees, and other aspects of the offering.
  • To learn more about the benefits

If companies don’t use a broker-dealer, they need to register as an Issuer Dealer and/or Issuer Agent in several states.

What States Require Issuer Dealer Forms for Regulation A Tier 2 Offerings?

Currently, states that require issuers of Reg A Tier 2 to register as dealers (provided they’re not using a registered broker-dealer) include the following:

Florida

In Florida, issuer dealers selling their own securities must register with the Florida Division of Securities. Under Section 517.021(6)(a)(2) of the Florida Statutes, issuers are defined as dealers of securities who must be registered with the Division of Securities as a dealer. Those selling public offerings are also subject to registration.

To register as an issuer-dealer in Florida, issuers need to submit a Form BD, financial statements, and other documentation through its electronic filing system.

In addition, one associated person (or agent) needs to be registered along with the dealer. This associated person must file a Form U-4 online along with a registration fee per associated person (agent). All associated persons should also submit fingerprints. Issuers are allowed to register up to five associated persons who then won’t need to undergo the examination process other associated persons must go through.

New York

The Martin Act of 1921, now known as Article 23-A of the New York General Business Law, defines issuers of securities as dealers under Section 359-e(a). If you’re an issuer, you’ll need to register as a dealer in the state unless you’re using a registered broker on a firm commitment basis.

You will need to file several forms including State registration documents and the Uniform notice.  In addition, if you hire salespersons that are not officers or directors (as identified in Form 99), they must submit a Form M-2, a filing fee of $150, and pass the FINRA Series 63 or Series 66 exams.

Texas

Issuer dealers in Texas must also register if they’re selling securities without a registered dealer. To do so, they can file the Form BD, financial disclosures and other documents including the Form U-4 for a designated officer and each agent to be registered.  A designated officer is required to be registered. In addition, additional agents must fill out Form U-4 filed with the Form BD and pass a securities exam accepted by the State Securities Board.

What are Issuer Agent Forms?

An issuer agent is a bit different than an issuer dealer. An issuer dealer would be the business selling securities, while the issuer agent would be any officer or director looking to sell securities in said state (or states). While broker-dealers get a fee for setting up transactions between investors and companies, registered issuer agents don’t necessarily need to receive a transaction-based commission. That is to say, even if an officer or director receives no transaction-based compensation for securities, they must still register in the following states.

Nevada, New Jersey, and Washington

In each of these states, a sales representative (any officer/director involved in selling securities) of an issuer must file a Form U-4 among other required documents and fees for each state. Potential exemptions may used in some of the states.

The Bottom Line

While it might seem cumbersome to register as an issuer dealer or issuer agent in the respective states, it’s actually a crucial step to ensure your Regulation A Tier 2 offering is compliant. The requirements and fees will vary by state, but if you’re serious about selling securities, it’s best to familiarize yourself with the laws and regulations of each state. That way, you can be sure you’re in compliance with all necessary requirements and avoid costly penalties.

Our consultants can walk you through these forms and help you file to the states.  To learn more, please contact us below:

What states require Issuer Dealer and Issuer Agent forms for Regulation A Tier 2 Offerings?
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