The enhancements to Reg A+ (read more here) not only increases the capital raise allotment ten-fold, but the Securities and Exchange Commission’s Compliance and Disclosure Interpretation published that an emerging growth company post a social media message about its offering to “test the waters” towards potential investors.
Their points are below. Note, when the SEC says “…technological limitations on the number of characters or amount of text…” they mean Twitter and StockTwits type platforms.
- The electronic communication is distributed through a platform that has technological limitations on the number of characters or amount of text that may be included in the communication;
- Including the required statements in their entirety, together with the other information, would cause the communication to exceed the limit on the number of characters or amount of text; and
- The communication contains an active hyperlink to the required statements that otherwise satisfy Rule 255 and, where possible, prominently conveys, through introductory language or otherwise, that important or required information is provided through the hyperlink.
These conditions are consistent with the SEC’s view on social media, when it gave the use of posts on Facebook and Twitter to communicate corporate announcements such as earnings a thumbs up. Of course, this all birthed from the 2012 Jumpstart Our Business Startups Act, which deregulated fundraising rules for emerging growth companies.