Regulation S is a set of rules issued by the Securities and Exchange Commission (SEC) under the Securities Act of 1933, that provides an exemption for certain offerings of securities that are made outside the United States. The regulation applies to the offer and sale of securities that occur outside the US territory and it is intended to facilitate the capital-raising activities of non-US issuers and to make it easier for them to access US capital markets.
The regulation applies to the offer and sale of securities that are made in “offshore transactions”, that are defined as transactions by an issuer or selling security holder that takes place outside the United States, with certain exceptions such as transactions involving the distribution of securities in the United States in violation of the registration requirements of the Securities Act of 1933.
Under Regulation S, securities offered and sold in offshore transactions are not considered “restricted securities” and therefore they are not subject to the same holding period and other restrictions that apply to restricted securities.
Regulation S also provides a “safe harbor” for offshore transactions that comply with certain conditions, including a prohibition on directed selling efforts in the United States and a requirement to provide certain disclosures to investors outside the United States.
It is important to note that the regulation does not exempt the offering or sale of the securities from compliance with other applicable laws, such as antifraud provisions or securities laws of other countries. Also, companies need to comply with all the legal and regulatory requirements in the countries where they are selling securities, they should consult with legal and financial professionals to make sure they are in compliance with all the rules.