Regulation-S is a 1990 rule of the United States Securities and Exchange Commission (SEC) that allows companies to raise money by selling unregistered securities offshore that can later be resold in the States. It offers an appealing and relatively inexpensive way to attract foreign investors.

United States securities law generally requires stock to first be registered with the SEC before it can be traded in US public markets.

Stock that isn't registered is restricted from public trading. Such "restricted stock" may trade in US public markets only under an exemption from the SEC registration requirement.

		By Letter A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
	# - 401(K) Plan - A �"A" Round Accredited Investor Accrued Interest Acquisition ACRS Accelerated Cost Recovery System. ADR American Depositary Receipt (ADR's) Advisory Board Allocation Alternative Assets Amortization AMT Alternative Minimum Tax Angel Financing Angel Investor Anti-dilution provisions Archangel Asset-backed loan Automatic conversion Average IRR - "B" Round Balance Sheet Bankruptcy BATNA (best alternative to a negotiated agreement) Bear Hug Benchmarking Best Efforts Blue Sky Laws Board rights Book Value Bootstrapping Bridge Financing Broad-Based Weighted Average Ratchet Burn Out / Cram Down Burn Rate Business Development Company (BDC) Business Judgment Rule Business Plan - C - CAGR Call Option Capital (or Assets) Under Management Capital Call Capital Gains Capitalization Table Capitalize Captive funds Carried Interest Cash Position Catch-up Chapter 11 Chapter 7 Chinese wall Clawback Closed-end Fund Closing Co-investment Collar Agreement Committed Capital Committed funds or raised funds Common Stock Company buy-back Consolidation Conversion Ratio Convertible Security Corporate Charter Corporate Resolution Corporate Venturing Corporation Covenant Cumulative Dividends - D - Deal Flow Deficiency Letter Demand Rights Depreciation Dilution Dilution Protection Director Disbursement Disclosure Document Distressed debt Distribution Diversification Dividend Down Round Drag-Along Rights Due Diligence - E - Early Stage EBITDA Economies of Scale Elevator Pitch Employee Stock Option Plan (ESOP) Employee Stock Ownership Plan Equity Kicker ERISA ERISA Significant Participation Test Evergreen Promise Exercise price Exit Strategy Exiting climates Exits (AKA divestments or realizations) - F - Factoring Final Regulation Finder Flipping Flotation Follow-on funding Form 10-K Form 10-KSB Form S-1 Form S-2 Form SB-2 Founders' Shares Free cash flow Full Ratchet Anti-dilution Fully Diluted Earnings Per Share Fully Diluted Outstanding Shares Fund age Fund Focus Fund of funds Fund Size - G - GAAP Generally Accepted Accounting Principles Gatekeeper GDR's Global Depositary Receipt (GDR's) General Partner (GP) General partner clawback General partner contribution - H - Hedge of hedging Hockey stick projections Holding Company Holding Period Hot Issue Hurdle Rate - I - Incubator Initial Public Offering (IPO) Institutional Investors Intellectual property Investment Company Act of 1940 Investment Letter IRA Rollover IRR ISO Issue Price Issued Shares Issuer - J - J-Curve Effect - K - Key Employees Key man clause - L - Later Stage Lead Investor Lemon Leveraged Buyout (LBO) Lifestyle firms Limited Partner (LP) Limited partner clawback Limited Partnerships Liquidation Liquidation Preference Liquidity Event Lock-up Period Lower quartile - M - Management buy-out (MBO) Management Fee Management Team Mandatory Redemption Market Capitalization Merchant banking Merger Mezzanine Financing Middle-market firms Mutual Fund - N - Narrow-based weighted average ratchet NASD National Association of Securities Dealers NASDAQ NDA (Non-disclosure agreement) Net Asset Value (NAV) Net Financing Cost Net income Net IRR Net Present Value Net present value (NPV) New Issue Newco No Shop, No Solicitation Clauses No-fault divorce Non-Compete Clause Non accredited NYSENew York Stock Exchange. - O - Open-end Fund Option Pool Original Issue Discount OTC Over-the-Counter. Outstanding Stock equal to the amount of issued shares less treasury stock. Over subscription Over subscription Privilege - P - Paid-in Capital Pari Passu Participating Preferred Participation Partnership Partnership agreement Pay to Play Penny Stocks Piggyback Registration PIK Debt Securities PIV Pooled Investment Vehicle. Placement Agent Plain English Handbook Plum Poison Pill substantial discount, Pooled IRR Portfolio Companies Post-Money Valuation Pre-Money Valuation Preemptive Right Preference shares Preferred Dividend Preferred return (AKA Hurdle Rate) Preferred Stock Private Equity Private investment in public equities (PIPES) Private Placement Reg. D offering Private Placement Memorandum Offering Memorandum. Private Securities Prospectus Put option sell - Q - QPAM - R - Recapitalization Reconfirmation Red Herring Redeemable Preferred Stock Redemption Registration Registration Rights Regulation A Regulation C Regulation D Regulation D Offering Regulation-S Regulation-S-B Regulation-S-K Regulation-S-X Reorganization or Corporate Reorganization Restricted Securities Restricted Shares Revlon Duties promote Right of First Refusal Rights Offering Risk Rule 144 Rule 144A Rule 147 Rule 501 Rule 505 Rule 506 -S - S Corporation SBIC SBIR Secondary funds Secondary Market Secondary Sale Securities Act of 1933 Securities Act of 1934 Securities and Exchange Commission Seed Money Seed Stage Financing Senior Securities Series A Preferred Stock Shell Corporation Small Business Administration (SBA) Small Business Innovation Development Act of 1982 Special purpose vehicle Spin out Staggered Board Statutory Voting Cumulative Voting. Stock Options Strategic Investors Subordinated Debt Subscription Agreement Sweat Equity Syndicate Syndication - T - Tag-Along Rights / Rights of Co-Sale Takedown Schedule Tax-free reorganizations See Internal Revenue Code Section 368. Tender offer Term Sheet Time Value of Money Trade sale Treasury Stock - U - UBTI ULPA Upper quartile - V - Venture Capital Financing Vesting schedules Vintage Year Voluntary Redemption Voting Right - W - Warrant Wash-Out Round Weighted Average Anti-dilution Williams Act of 1968 Workout Write-off Write-up/Write-down

Exemption

Regulation-S allows a stock offering to be exempt from the SEC registration requirements if:

• the offering is made outside the US
• and in accordance with certain conditions in the regulation

Of primary importance is that Regulation-S stock is classified as a restricted security within the meaning of Rule 144. This rule prohibits resale to US investors or in US markets for at least one year after the stock is purchased - a time period referred to as the "the distribution compliance period." or DCP.

A company must report a Regulation-S stock issuance on its next 10Q or 10K public filing. Thus, investors are informed that additional stock has been issued and alerted that it may appear in the US market for sale in the future.

Stock certificates are marked with a special legend to give notice that transfer is prohibited except in compliance with the regulation. After the distribution compliance period has expired, the legend can be removed and shares may be sold in the public market under the provisions of Rule 144.

Benefits

Companies receive three main benefits in using Regulation-S to raise money:

• they can access receptive foreign investors and foreign capital markets;
• the paperwork is much simpler than a registered offering;
• the process is less expensive and much faster than the complexities of a registered offering.

Offshore investors often like Regulation-S offerings because they can usually buy shares at a discount that helps compensate for the risk of the 12-month holding period. Later they can sell the stock in the larger, liquid US public market.

 

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