Interest in raising capital via Reg A offerings is growing among OTC issuers, according to a survey released last week by OTC Markets Group. Among the 119 OTC-quoted companies responding, 6.5% said that they plan to raise capital this year under the Jumpstart Our Business Startups Act (JOBS Act) Regulation A+, compared to only 1.6 percent of respondents who used the financing option in 2016.
The more than four-fold increase in OTC-quoted issuers planning to utilize Reg A this year to raise capital is surprising in that OTC companies are already publicly reporting companies and therefore have the ability to issue shares through traditional registered offerings. Many, due to Regulation A’s prohibition of Exchange Act-mandated reporting companies from employing the exemption, cannot use Reg A at all. Nonetheless, interest is growing among those that can use the exemption to raise growth capital.
The study was conducted from March to May 2017, and surveyed 117 CEOs and CFOs of U.S. and international companies under $2 billion in market cap that trade on the OTCQX and OTCQB markets.
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