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http://www.TheSecuritiesAttorneys.com Reg A – Insignificant Deviations
Rule 260 - certain insignificant deviations from a term, condition or requirement of Reg A will not result in the issuer’s loss of the exemption.
However, certain provisions of Regulation A are deemed to be significant to the offering as a whole. Any deviations from these significant provisions results in the issuer’s loss of the exemption. These provisions cover (1) issuer eligibility, (2) offering limits, (3) offers, and (4) continuous or delayed offerings.
A failure to comply with a term, condition or requirement of Regulation A will not result in the loss of the exemption for any offer or sale to a particular individual or entity, if the person relying on the exemption establishes that: (1) The failure to comply did not pertain to a term, condition or requirement directly intended to protect that particular individual or entity; (2) The failure to comply was insignificant with respect to the offering as a whole, provided that any failure to comply with the offering limitations, issuer eligibility criteria, or requirements for offers or continuous or delayed offerings will be deemed to be significant to the offering as a whole; and (3) A good faith and reasonable attempt was made to comply with all applicable terms, conditions and requirements of Regulation A.
This allows for certain errors that can occur while clearly delineating those provisions from which an issuer may not deviate. Whether a deviation would be significant to the offering as a whole depends on the facts and circumstances related to the offering and the deviation. In certain situations, such as pre - qualification sales, it may be hard to establish a good faith attempt at compliance.
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