Underlying History
Regulation-S has existed in its current form since 1997, when the regulatory system concerning share certificates was regulated by the US Securities and Exchange Commission (SEC). Regulation-S refers to non-American nationals and investors and was created to attract foreign capital for companies on the American exchanges. By linking a 12-month restricted period to Regulation-S, it is possible to simultaneously simplify and speed up the management of new issues by American companies. SEC Amends Regulation-S On February 10, 1998, the US Securities and Exchange Commission (the "SEC") adopted amendments to Regulation-S under the Securities Act of 1933, as amended (the "Securities Act"), as part of a package of initiatives aimed at stopping abusive practices in connection with offerings of equity securities. Regulation-S consists of a general statement to the effect that Section 5 of the Securities Act is deemed not to apply to offers or sales of securities made outside the United States. Regulation-S Frequently Asked Questions Q. What is the difference between regulation-S and Regulation-S-8? You can get more information about the Uses of Regulation-S-8 from here Q. Is there a restrictive Legend on the issued certificate? Yes, the legend placed on the issued certificate states, "Transfer of the Securities is prohibited, other than in compliance with Regulation-S, pursuant to registration under the Securities Act, or Pursuant to an available exemption from registration". Q. What is the current "Distribution Compliance Period"
as the restriction period is now known? Q. What are the issuers reporting requirements for the Reg-S filing? The next regular filing (eg.10q, 10k) after Reg-S issuance is required to contain relevant disclosure of Regulation-S transaction(s) during the applicable reporting period. Q. Is it complicated to sell Reg-S stock back into the US markets when the holding period requirement is satisfied? NO. After the 1 year 'distribution compliance period' is over, a stockholder can have the legend removed and a new certificate issued to him that is freely tradable in the US marketplace, with US buyers. It's a simple procedure that requires the certificate being surrendered to the company's transfer agent, along with a declaration requesting that the legend be removed due to compliance with the rule and the 12-month holding period. If your stock is held in your Regulation-S.com equities account, our back office and legal staff will handle the whole process for you. You can also at this time easily sell your Reg-S stock holdings into the US markets from your Regulation-S.com brokerage account. Q. When I look up Regulation-S on the Internet, why do I find lots of references to fraud? During the mid-90's, there was serious abuse of the old Reg-S rules through numerous loopholes in the old law, mostly due to the discrepancy in holding periods for non US (40 days) versus US (2 years) purchasers of Restricted Securities. The amendments to Regulation-S made in 1997, in particular the equalizing of restrictive holding periods, eliminated the loopholes and the previous widespread fraudulent application of the Regulation ended immediately thereafter. Go here to see an overview of these amendments
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