HR3135-119

What This Bill Does

The RACE Act amends Securities Act section 3(b) for Regulation A-style exempt offerings. If an issuer has already issued a class of preferred, common, or convertible securities exempted under paragraph (2) and filed an offering statement that the SEC qualified, then a later offering statement for an additional class of exempt securities is deemed qualified upon filing when the new class is substantially similar to the original class, shares predefined characteristics, each class offers less than 5 million dollars, and the aggregate amount of all such additional classes sold during the prior 12 months remains within the overall Regulation A limit. The bill also clarifies that substantially similar securities do not need to have the same nature or terms. The policy effect is faster and cheaper repeat offerings for small issuers using similar security structures, with the 5 million dollar per-class condition and aggregate cap limiting the shortcut.

Who Benefits and How

Small issuers using Regulation A benefit because additional substantially similar offerings can become effective upon filing instead of waiting for a fresh SEC qualification process. Startup finance teams benefit from lower delay and legal-process friction when issuing repeat classes of similar securities. Investors in small offerings may benefit if issuers can raise follow-on capital more quickly under predefined terms. Securities lawyers and filing agents benefit from clearer rules for repeat offering statements.

Who Bears the Burden and How

SEC Corporation Finance staff must monitor deemed-qualified filings and police whether classes are substantially similar and within dollar limits. Investors bear disclosure and review risk if additional offerings bypass normal qualification timing. State securities regulators may see more repeat exempt offerings moving quickly into the market. Issuers must track per-class and 12-month aggregate offering limits to avoid losing the exemption.

Key Provisions

• Adds a deemed-qualified-upon-filing rule for additional substantially similar exempt securities classes.
• Limits the shortcut to classes with offering amounts under 5 million dollars each.
• Requires aggregate additional offerings in the prior 12 months to stay within the overall Regulation A dollar limit.
• Clarifies that substantially similar securities need not have identical nature or terms.