Regulation Crowdfunding and Regulation A+ each impose an entity-level eligibility test that sits ahead of every other question about a raise, and the two lists are not the same. 17 CFR 227.100, Crowdfunding exemption and requirements, disqualifies six categories of issuer at paragraph (b); 17 CFR 230.251, Scope of exemption, sets out eight affirmative issuer conditions at paragraph (b). A company can be plainly eligible for one exemption and structurally barred from the other — the most common example being a fund that relies on an Investment Company Act exclusion, which Reg-CF shuts out and Reg-A+ generally does not.
This is the cheapest diligence in a capital raise and routinely the last one done — after platform conversations, deck work, and sometimes a waitlist build. Below: both lists in full, the divergences that decide which exemption is available, and what each answer changes about how a campaign gets planned.
Two rules drafted in opposite directions
Rule 100(b) is written as exclusions — the crowdfunding exemption "shall not apply" to an issuer with any listed characteristic. Rule 251(b) is written as affirmative conditions the issuer must satisfy. Both are pass/fail gates assessed as of the filing of the offering statement, with no materiality qualifier and no cure by disclosure. Two items are curable by subsequent action; both are noted below.
Reg-CF: the six exclusions in Rule 100(b)
Regulation Crowdfunding is unavailable to an issuer that:
- Is not organized under, and subject to, the laws of a State or territory of the United States or the District of Columbia. An organizational test, not an operational one: a Delaware entity with an entirely offshore team qualifies on this point; a foreign-incorporated parent does not, whatever its US footprint.
- Is subject to Exchange Act Section 13 or 15(d) reporting. Existing public reporting companies cannot use Section 4(a)(6).
- Is an investment company as defined in Section 3 of the Investment Company Act of 1940, or is excluded from that definition by Section 3(b) or Section 3(c). The second half is the operative language and the one most often misread.
- Is disqualified under 17 CFR 227.503(a), Disqualification provisions — the Reg-CF bad-actor rule.
- Has previously sold securities under Section 4(a)(6) and has not filed with the Commission and provided to investors the required ongoing annual reports during the two years immediately preceding the filing of the offering statement. Curable — the instruction to paragraph (b)(5) restores eligibility once both required annual reports have been filed and provided.
- Has no specific business plan, or has indicated that its business plan is to merge with or acquire an unidentified company or companies. The blank-check exclusion.
Item 3 ends more conversations than the other five combined. Because the exclusion reaches entities that are excluded from the investment company definition by Section 3(b) or 3(c), the standard private-fund carve-outs — the 3(c)(1) and 3(c)(7) exclusions most venture and private funds rely on, and the 3(c)(5)(C) real estate exclusion — do not merely fail to help; they independently trigger ineligibility. A pooled vehicle organized to hold assets and distribute returns is generally not a Reg-CF issuer. The narrow structural exception runs the other way: a crowdfunding vehicle meeting every condition of Rule 3a-9 is deemed not to be an investment company, the mechanism examined in our breakdown of Reg-CF SPVs under Rule 3a-9. That vehicle holds a single class of one operating company's securities — it is not a route to crowdfunding a fund.
Reg-A+: the eight conditions in Rule 251(b)
To use Regulation A, the issuer of the securities:
- Is organized under the laws of the United States or Canada, or any State, Province, Territory or possession thereof, or the District of Columbia, with its principal place of business in the United States or Canada. Reg-A+ applies both an organizational and a principal-place-of-business test, and it admits Canadian issuers, which Reg-CF does not.
- [Reserved]. This paragraph previously excluded Exchange Act reporting companies; that exclusion was removed by statute in 2018, and reporting companies may now use Regulation A.
- Is not a development stage company that has no specific business plan or purpose, or that has indicated its business plan is to merge with or acquire an unidentified company or companies.
- Is not an investment company registered or required to be registered under the Investment Company Act of 1940, or a business development company as defined in Section 2(a)(48) of that Act.
- Is not issuing fractional undivided interests in oil or gas rights, or a similar interest in other mineral rights.
- Is not, and has not been, subject to a Commission order under Exchange Act Section 12(j) within five years before the filing of the offering statement.
- Has filed all reports required under 17 CFR 230.257, Periodic and current reporting; exit report, or under Exchange Act Section 13 or 15(d), during the two years before filing — or such shorter period as the issuer was required to file.
- Is not disqualified under 17 CFR 230.262, Disqualification provisions — the Reg-A bad-actor rule.
Condition 4 is materially narrower than the Reg-CF equivalent. It reaches registered investment companies, entities required to register, and BDCs — but it does not, on its face, sweep in every entity relying on a Section 3(c) exclusion. That drafting difference is why many real estate and alternative-asset sponsors structure toward Reg-A+ rather than Reg-CF. Whether a specific vehicle is "required to be registered" is an Investment Company Act analysis that belongs with counsel, not a platform intake form.
Side by side: where the tests actually diverge
| Issuer characteristic | Reg-CF (Rule 100(b)) | Reg-A+ (Rule 251(b)) | Reg-D 506 |
|---|---|---|---|
| Non-US organized issuer | Excluded | Excluded unless US or Canada, with principal place of business in US or Canada | No entity-jurisdiction condition in the rule |
| Exchange Act reporting company | Excluded | Permitted — paragraph (b)(2) is reserved | Permitted |
| Registered investment company or BDC | Excluded | Excluded | Separate regulatory regime applies |
| Entity relying on a Section 3(b) or 3(c) exclusion (most private funds) | Excluded by the express terms of (b)(3) | Not excluded on its face; requires an Investment Company Act analysis | Commonly used by such vehicles |
| Blank check / no specific business plan | Excluded | Excluded | Rule 506 has no comparable condition |
| Fractional oil, gas or mineral interests | No specific exclusion | Excluded | No specific exclusion |
| Delinquent on prior exempt-offering reports | Excluded until the two years of annual reports are filed and provided | Excluded if Rule 257 or Exchange Act reports were not filed in the prior two years | No ongoing-report condition |
| Prior Exchange Act Section 12(j) order | No specific exclusion | Excluded for five years | No specific exclusion |
| Bad-actor disqualification | Rule 503(a) | Rule 262 | Rule 506(d) |
| Offering ceiling | $5,000,000 in a trailing 12-month period | Tier 1: $20,000,000; Tier 2: $75,000,000, each measured under Rule 251(a) | No dollar limit |
Rule 251(a) additionally caps affiliate selling-securityholder participation within each tier's ceiling, at $6,000,000 for Tier 1 and $22,500,000 for Tier 2.
Entity eligibility is not bad-actor disqualification
These are separate screens run against different subjects, and conflating them is a recurring source of confusion. Entity eligibility asks what the issuer is: where it is organized, what it does, whether it is a fund, whether it filed its reports. Bad-actor disqualification asks who is attached to it — directors, executive officers, 20% beneficial owners, promoters, predecessors and affiliated issuers, and placement participants — and whether any of them has a covered event such as a specified criminal conviction, court injunction, or regulatory order within the applicable look-back window.
The practical difference is timing and remediability. Entity ineligibility is visible from the formation documents on day one and is either fixable by restructuring or not fixable at all. A bad-actor event attaches to a person, often surfaces late in diligence, and can sometimes be addressed by a change in role or ownership before filing. Both screens must clear. The covered persons and events are set out in our analysis of bad-actor disqualification under Rule 506(d); Rules 503 and 262 track the same architecture.
The eligibility failures that surface most often
The offshore holding company
A founding team incorporates in Singapore, the Cayman Islands, or the UK for investor or tax reasons, then finds that Reg-CF requires organization under US state law and Reg-A+ requires US or Canadian organization plus a US or Canadian principal place of business. Redomiciliation is a corporate project with tax consequences, not a filing adjustment — and it is a separate question from whether non-US investors may participate.
The fund that assumed retail crowdfunding was open to it
A sponsor with a 3(c)(1) or 3(c)(5)(C) posture reads that Reg-CF permits non-accredited investors and builds a plan around it. Rule 100(b)(3) forecloses it. The realistic paths are Reg-A+ subject to an Investment Company Act analysis, or Reg-D 506(c) to accredited investors.
The delinquent repeat issuer
An issuer that ran a Reg-CF round and then stopped filing Form C-AR cannot file a new offering statement until it has filed and provided the annual reports required under 17 CFR 227.202, Ongoing reporting requirements. The cure is mechanical but takes time and current financials.
What the answer changes about the campaign
Eligibility determines the investor universe, and the investor universe determines the acquisition model. A Reg-CF or Reg-A+ path opens non-accredited retail: broad paid social and content distribution, a high-volume landing page, cost-per-investor economics measured against a small average check. A 506(c) path restricts the audience to verified accredited investors, shifting spend toward targeted channels, longer nurture, and a far higher tolerable cost per qualified lead. Those are different campaigns with different budgets, creative, and compliance review — not one campaign with a different regulatory label.
The sequence that avoids that outcome is unglamorous: confirm entity eligibility against the rule text, run the bad-actor screen across covered persons, select the exemption, then commission the campaign.
Frequently Asked Questions
Can a foreign company use Reg-CF?
No. Rule 100(b)(1) excludes any issuer not organized under, and subject to, the laws of a State or territory of the United States or the District of Columbia. Regulation A is broader, admitting issuers organized in the United States or Canada with a principal place of business in the United States or Canada. Founders in this position typically consult counsel about forming or redomiciling a US issuer entity before drafting an offering statement.
Can a fund or investment vehicle raise under Reg-CF?
Generally not. Rule 100(b)(3) excludes investment companies as defined in Section 3 of the Investment Company Act of 1940 and also entities excluded from that definition by Section 3(b) or 3(c) — the exclusions most private funds rely on. The narrow exception is a crowdfunding vehicle meeting every condition of Rule 3a-9, which is deemed not to be an investment company and exists solely to hold securities of one operating company.
Does being an SEC reporting company block a Reg-A+ offering?
Not currently. Paragraph (b)(2) of Rule 251 is reserved, following the 2018 statutory change permitting Exchange Act reporting companies to use Regulation A. Reg-CF still excludes reporting companies under Rule 100(b)(2). Reporting issuers should confirm with counsel how the Rule 251(b)(7) filing-history condition applies to their Exchange Act reports.
Is a missed Form C-AR a permanent bar to future Reg-CF raises?
No. The instruction to Rule 100(b)(5) provides that a delinquent issuer can again rely on Section 4(a)(6) once it has filed with the Commission and provided to investors both annual reports required during the two years preceding the filing of the offering statement. The condition is measured at that filing, so the cure must be completed first.
Is bad-actor disqualification the same thing as issuer eligibility?
No — they are separate screens. Entity eligibility examines what the issuer is: jurisdiction of organization, business, reporting history. Bad-actor disqualification under Rules 503, 262, and 506(d) examines whether covered persons connected to the issuer have disqualifying events within the applicable look-back periods. An offering must clear both.
When in the timeline should eligibility be confirmed?
Both rules frame their conditions by reference to the filing of the offering statement, so the screen belongs in the drafting window rather than at closing. Running it earlier still is the cheaper practice, because an eligibility failure that requires redomiciliation or restructuring is a corporate project measured in months.
Run the eligibility screen before anything gets built
Entity eligibility is a rule-text question with a defined answer, available on day one, that determines which investors can lawfully be marketed to. Channel mix, creative, budget, and platform selection are all downstream of it.
Growth Turbine has provided marketing support across more than $490M in aggregate issuer-reported totals, with 200+ campaigns supported across Reg-CF, Reg-D 506(c), Reg-A+ and tokenized securities offerings, on 23+ crowdfunding platforms and across 25+ industries. Our Reg-CF campaign work and Reg-A+ marketing engagements start from the exemption an issuer is actually eligible to use, because the audience the rules permit is the audience the campaign has to reach. Talk to our team before the acquisition plan is scoped.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute legal, financial, or investment advice. Always consult with qualified legal counsel and financial advisors before launching a capital raise.
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