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Series 79 practice questionmediumRegulation S

What are the two general conditions that must be met for an offering to qualify for the Regulation S safe harbor?

  1. AThe issuer must be a foreign company and the offering must be denominated in a foreign currency
  2. BThe securities must be listed on a foreign exchange and sold through foreign broker-dealers
  3. CThe offering must be less than $100 million and all purchasers must be non-U.S. citizens
  4. DThe offer must be made in an offshore transaction and there can be no directed selling efforts in the United States✓ Correct answer
Explanation

Why D — The offer must be made in an offshore transaction and there can be no directed selling efforts in the United States

Regulation S provides a safe harbor from Securities Act registration for offers and sales of securities that occur outside the United States. The two fundamental conditions are: (1) the offer or sale must be made in an 'offshore transaction,' meaning the buyer is outside the U.S. at the time of the sale, and (2) there must be no 'directed selling efforts' in the United States, meaning no marketing or conditioning of the U.S. market for the securities. These conditions apply to both U.S. and foreign issuers.

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