Regulation S is a Securities and Exchange Commission (SEC) regulation that provides a safe harbor from the registration requirements under the Securities Act of 1933 for certain offerings and sales of securities outside the United States. Regulation S applies to offerings that are conducted entirely outside of the United States, targeting non-U.S. persons.
Under Regulation S, there are no specific ongoing reporting requirements imposed by the SEC for companies conducting offerings and sales of securities to non-U.S. persons. However, there are certain provisions and considerations associated with Regulation S offerings:
- Safe Harbor for Offshore Offerings: Regulation S provides a safe harbor exemption for securities offerings and sales that occur entirely outside of the United States. This exemption applies to both equity and debt securities and allows companies to conduct offshore offerings without registering with the SEC.
- Restrictions on Resale of Securities: Securities sold in compliance with Regulation S have restrictions on their resale into the United States for a specific period. Typically, there’s a holding period of one year for restricted securities sold in offshore transactions under Regulation S. The securities must be offered only to non-us citizens and the offering must be IP blocked if the company is raising its technology online.
- Disclosure Requirements: While Regulation S exempts offerings from SEC registration, companies are still subject to anti-fraud provisions. Companies conducting offerings under Regulation S should provide all material information necessary for investors to make informed investment decisions.
- Securities Act Compliance: Even though there are no specific ongoing reporting requirements to the SEC for Regulation S offerings, companies are required to comply with other provisions of the Securities Act of 1933, particularly regarding anti-fraud and anti-manipulation provisions.
- Compliance with Foreign Jurisdictions: Companies conducting Regulation S offerings might need to comply with the securities laws and regulations of the foreign jurisdictions where the offerings are made. This may include filing requirements or compliance with local laws. Companies need to make sure they are checking with local securities regulators or securities lawyers to ensure they are not offside with using Reg S.
It’s important for companies engaging in Regulation S offerings to understand the specific requirements of the regulation and ensure compliance not only with SEC regulations but also with the securities laws of the foreign jurisdictions involved. Companies should seek guidance from legal and financial professionals experienced in cross-border offerings to navigate the complexities and compliance obligations associated with Regulation S offerings.