Regulation S

Definition:

An SEC regulation relating to offerings outside the United States. Regulation S includes two Safe Harbors from the registration requirements of the Securities Act for Offshore sales, one for issuers, underwriters, and Affiliates (Rule 903) and one for resales by persons other than the issuer (Rule 904).

In order to qualify as a Regulation S offering, two general conditions must be complied with: (1) each offer and/or sale must be made in an Offshore transaction; and (2) no Directed Selling Efforts can be made.

There are three categories for Regulation S. Issuers may use Category 1 where there is no Substantial US Market Interest (SUSMI) in their securities. Generally, there are no offering restrictions imposed other than the two general conditions listed above. Category 2 of the Safe Harbor is available where the securities being distributed in reliance on the issuer Safe Harbor are: (a) equity securities of an Exchange Act reporting foreign issuer; or (b) debt securities of any Exchange Act reporting issuer or of a non-reporting foreign issuer. The offering restrictions under Category 2 require that all offers and sales of the securities made prior to 40 days following the closing (the “Distribution Compliance Period”) be made only in accordance with the issuer Safe Harbor or the resale Safe Harbor or pursuant to registration under the Securities Act or an applicable Exemption therefrom. Category 3 is the only category available for offerings of equity securities of reporting and non-reporting US issuers, debt securities of non-reporting US issuers and equity securities of non-reporting foreign issuers with SUSMI. In addition to the general conditions, the most restrictive offering restrictions (for example, with regard to distribution compliance periods and purchaser certifications) are imposed by Category 3, which are designed to prevent unregistered distributions in the United States under circumstances where the likelihood of the offering inadvertently extending to the United States is greatest.