Regulation S allows domestic and foreign issuers to raise capital by selling securities overseas. These securities do not need to be registered with the SEC under the Securities Act of 1933, and therefore, can lower the regulatory costs and time as compared to traditional registered offerings. Candidates preparing for FINRA and NASAA license exams should be familiar with:
1) Issuers: Who can rely on Regulation S
2) Purchasers: Who can purchase Regulation S securities
3) Resale provisions: Once Regulation S securities have been purchased, when, if ever, can these securities be resold into the United States
Issuers: Who can rely on Regulation S
- Allowed: Both US and Foreign issuers of securities may sell securities in a Regulation S offering.
- Prohibited: Regulation S is NOT available to mutual funds (open-end investment companies) and unit investment trusts (UITs).
Purchasers: Who can purchase Regulation S securities
- Only foreign investors are allowed to purchase Regulation S securities. Regulation S looks to the investor’s address, not their citizenship. So a U.S. citizen living in France can participate, whereas a French citizen living in the United States could not.
Resale provisions: When, if ever, can Regulation S securities be resold into the United States
Holding period before | Holding period before (There is no holding period) | |
| Debt securities | 40 days | Immediately |
| Equities of SEC reporting issuers | 6 months | Immediately |
| Equities of non-reporting SEC issuers | 12 months | Immediately |
Knopman Notes
Candidates should be familiar with all of the characteristics associated with the Regulation S offering, including who can rely upon it, who can participate, and how investors can resell their securities both internationally and abroad.
Relevant Exams
Series 7, Series 24, Series 65, Series 66, Series 79
