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What are Regulation S and Regulation D?

I often hear Regulation S and Regulation D mentioned in relation to the EB-5 visa program. But what exactly is Regulation S? What is Regulation D?

Answers

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    Ed Beshara

    Immigration Attorney
    Answered on

    The securities laws allow the EB-5 project (the Issuer) to make a public offering (without specific registrations, under Regulation D to the potential investors located in the United States and to the potential investors outside the United States under Regulation S.

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    John J Downey

    Immigration Attorney
    Answered on

    These are regulations pertaining to the Securities and Exchange Commission (SEC) and have to do with offerings (subscriptions). They have to do with whether or not the offerings are made in the United States or abroad. It requires expert advice from a qualified person such as a licensed broker.

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    Vaughan de Kirby

    Immigration Attorney
    Answered on

    Regulation S applies to a foreign national making the investment - introduction and the entire transaction takes place on foreign soil. Regulation D applies to an "Accredited" investor which is an individual that has a yearly income of $200,000 or assets of $1 million exclusive of their personal residence - or a couple with a yearly income of $300,000.

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    Robert Lee

    Immigration Attorney
    Answered on

    It is the securities regulation applied to oversea security sales (Reg S) and domestic security sales (Reg D). The investment slots in regional center projects are considered securities and must comply with SEC regulations.

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    Salvatore Picataggio

    Immigration Attorney
    Answered on

    These are securities law regulations regarding how and to whom an EB-5 project can market their investments. If you are an investor, you want your EB-5 counsel to check on the EB-5 project documentation and structure for compliance with these regulations. If you have a project, your documentation needs certain language and needs to be structured to comply with these regulations.

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    Kevin S Kim

    Securities Attorney
    Answered on

    Regulation D is a securities regulation that contains a series of exemptions that exempt businesses that are offering to buy or sell securities from registering with the SEC. The 3 exemptions are Rule 504, 505 and 506. Rule 506 (b) and 506(C) are the most commonly used securities exemptions by private investment vehicles. Each rule has specific requirements to ensure investor protections. Regulation S is an offshore securities exemption. It is designed for U.S. issuers to offer to buy or sell securities in a foreign country. It is often concurrently used with Rule 506 to allow for domestic and foreign investors.

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    Ian E Scott

    Immigration Attorney
    Answered on

    Regulation S and Regulation D are SEC regulations that deal with exemptions related to securities. When you sell securities in the United States, you have to either register the securities (complex process - financial statements, audit, private placement memo, etc.) or find an exemption as to why you do not have to register the securities. Reg. D relates to when your investors are in the United States. Reg. S is an exemption that you can use when your investors are outside the United States and U.S. people were not used to attract them.

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    Robert Cornish

    Securities Attorney
    Answered on

    Very briefly, Regulation D is the provision under the United States Securities Act of 1933 ("1933 Act") that permits the sale of securities to certain investors without registration. Regulation S is a very limited offering exemption where registration requirements are relaxed if all of the persons investing in the offering are not physically in the United States. Given that many EB-5 investors are actually present in the United States, the Regulation S exemption is very often misinterpreted and misused by project sponsors. Work with an attorney to review your PPMs and other documents before you invest so that compliance with claimed exemptions may be verified to some degree.

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    Robert J Ahrenholz

    Securities Attorney
    Answered on

    Regulation D is a safe-harbor exemption under the Securities Act of 1933 with respect to the private placement exemption in Section 4(a)(2) thereof. Securities offerings made pursuant to that exemption are thus exempted from the registration requirements of that Act with the Securities and Exchange Commission. Regulation S relates to an exemption from registration under that Act for offerings off-shore to non-U.S. persons.

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