Exempt Offerings  JOBS Act Solutions

advising on exempt offerings to find investors.  

Simultaneous Regulation D and Regulation S Offerings

The ideal exempt offering is offered globally with online general solicitation.

In the U.S., it is illegal to sell securities that are not registered or exempt. The most popular exemption, Rule 506(c, covers accredited investors who are U.S. persons and whose accreditation status can be verified. Regulation S covers exempt offerings made to non-U.S. persons. If an issuer only uses Regulation S, sales can only be made to non-U.S. persons.

Launching two side-by-side offerings with one relying on Regulation S and the other on Rule 506(c  has compelling advantages to most issuers.

If an issuer only uses Rule 506(c, it must verify every investor as accredited, even non-U.S. investors, unless it is also using Reg Cf. Significantly, 506 offerings can be directed to anyone! The accredited investor requirement only kicks in when the issuer takes someone's money. 

Issuers must take care to treat each offering as a separate offering. Issuers must comply with all requirements for a 506(c offering, including third-party executed verification. The dual offerings must clearly delineate between U.S. and foreign investors.

Practice tip: Before launching a dual offering, set up a separate website for each.

Resale Restrictions

Both Rule 506(c and Regulation S have important resale restrictions, state-specific for U.S. investors.