What is Regulation S?

Regulation S provides a “safe harbor” or exemption for issuers to offer and sell securities.  Regulation S applies when the securities will be considered “outside the United States” for purposes of certain rules under the U.S. securities laws, and therefore won’t be subject to the registration requirements of such laws.

The safe harbor provided by Regulation S has two general requirements:

• Offshore transaction -- an offer or sale of securities is made in an “offshore transaction” if (i) the offer is not made to a person in the United States (other than a distributor) and (ii) at the time the buy order is originated, the buyer is outside the United States or the seller and any person acting on his behalf reasonably believes that the buyer is outside the United States.
• No directed selling efforts -- “Directed selling efforts” are defined as “any activity undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for any of the securities being offered in reliance on… Regulation S.”