Regulation S provides an SEC-compliant way for U.S. and international (Non-U.S.) companies to raise capital in and outside the U.S. It is not necessary to have a company in the United States of America to use Regulation S.
A Regulation S offering can issue equity or debt securities. A company that makes their offering under Reg S is also allowed to use another method to raise capital from U.S. investors - usually Reg D 506 C or Rule 144A.
Differences between Regulation S and Regulation D:
Regulation S investors from outside the U.S. can be of any wealth level which is much easier for the investor and for the company raising capital than in a Regulation D. Reg S is a good compliment to Reg D, because Reg S allows non-U.S. investors to invest in a U.S. company or a non-U.S. company on a similar basis to the Reg D terms, but with no requirement to be accredited (wealthy) investors.
Requirements for Regulation S:
Regulation S requires that the investment offer and sale must be made to investors that are outside the U.S. and U.S. investors must not be shown the non-U.S. investor terms.*
There is no required SEC registration for Reg S offerings, but there are methods and good practices that must be followed. We bring in an attorney that writes a Private Placement Memorandum (PPM) and Subscription Agreement for your offering - this describes the investment in legal and financial terms. With the PPM and Subscription Agreement, you can raise money online through our platform if we both decide to work with each other.
What else can Regulation S be used for?
Regulation S can also be used in combination with Rule 144A offerings. In this case, the U.S. investors must be Institutional and they are immediately liquid after they invest, and the security can be listed for their trading purposes on exchanges called A.T.S. - Alternative Trading Systems with very little disclosure and reporting requirements. Non-U.S. investors are liquid when they sell to non-U.S. investors. Clearly, Rule 144A only works when the Issuing company's security is appealing to Institutional investors. Contact us for more details on Rule 144A. Manhattan Street Capital will be making Rule 144A offerings.
*The Manhattan Street Capital site software automatically checks the location of potential investors and has the investor certify their location before allowing a non-U.S. investor to see the Reg S offering.
If you would like to learn more, Contact us.