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The US Securities and Exchange Commission's (SEC) "Regulation S" sets forth conditions under which securities offerings by American (USA) companies may take place outside of the USA with qualified foreign buyers, without registration under the Securities Act of 1933. In essence, Regulation S securities are a form of restricted securities that may only be sold to non-US persons.

Regulation S has existed in its current form since 1998 and refers to non-American (USA) nationals and was created to attract foreign capital for companies on 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 US companies.

Regulation-S.com is an online Regulation S Exchange and Marketplace. Shares are not traded directly through the Regulation-S.com portal, all trades are executed through our brokerage Membersites and an account with a brokerage Membersite is required in order to execute buy and sell orders.

There are several types of Regulation S securities, but Regulation-S.com only works with those that have underlying trading in the US marketplace, also known as Category 3.

Regulation S equities are a restricted form of equity, which means that they are being restricted from resale to US persons or in the underlying US marketplace for a period of between one and two years, depending on the quality and quantity of information available on the issuing company.

The regulations for resale of these securities after this restriction period are under "Rule 144" of the SEC, which also means that the number of shares you can sell between 1 and 2 years, even if the legend is removed, is restricted according to the share volume traded in the underlying marketplace.

Our facility provides non-US investors the capability to trade these securities between each other during this restriction period. The liquidity presented inside of the system is strictly dependent on the appetite and purchasing from the clients within the system, so there is no guarantee that any client in the system will purchase these shares from an account holder; Which is important to keep in mind.

For securities originally purchased through the system:
Securities are purchased through the account system. There are no additional fees for the purchase or account other than brokerage fees at the time of purchase. If a client desires to have the legend removed from their security holding between 1 and 2 years old, we will perform this process for them, charging them only the legal and transfer fees necessary to do so.

At the two year anniversary of the security, our backoffice facility removes the legend from the security automatically and replaces the restricted securities in the client's account for free-trading shares, allowing them to trade on the underlying US marketplace. This process can take up to 60 days from the time of the anniversary. There are no additional charges to the clients for legend removal of 2 year old holdings.

Once the legend is removed, and the securities are sold, the client can request the funds be sent to them from within the system.

All of our procedures are online and brokerage fees and wire transfer fees are within international standards.

We do not work with the North American brokerage system, and therefore, none of our services are integrated with any of the financial institutions or products in use there.

We do not operate in North America and do not have representatives or offices in North America.

1. Regulation S, Category 1 securities - Exchange listings/services for foreign issuers of securities, with no substantial US market interest (no flowback of securities into US market), which sell to US and non-US investors;
2. Regulation S, Category 2 securities - Exchange listings/services for foreign issuers of securities with substantial secondary US market interest (includes flowback of securities into the US market after the required 40-day Distribution Compliance Period (DCP)), which sell to US and non-US investors;
3. Regulation S, Category 3 securities - Exchange listing/services for US issuers of securities which sell offshore to foreign investors (includes flowback of securities into the US market after the required 1 year DCP)

Regulation-S.com™ public marketplace addresses Category 3 of these Issues as they provide an element of realistic liquidity at the termination of the DCP.

For Category 1 or 2 Regulation S securities issues: Clients wanting to participate in this marketplace must be vetted through our primary market representative office to ensure that they are financially able and sophisticated enough in their knowledge of investments that they will be able to overcome the inherent lack of liquidity of these equities.

After the one year “Distribution Compliance Period' (DCP) is over, a securities holder can have the legend removed and a new certificate issued that is freely tradable in the US marketplace with resale limitations as laid out by Rule 144, which contains restrictive elements on the resale subject to underlying common market conditions such as liquidity, etc.

The procedure requires that the certificate be surrendered to the issuer company's transfer agent, along with a declaration requesting that the legend be removed due to compliance with the rule and the twelve (12) month holding period.

If the stock is held in a Regulation-S.com Member Seat equities account, the Exchange’s back office and legal staff handle the whole process for the Investor. The Investor can also at this time sell their Regulation S holdings into the US markets from their Regulation-S.com Member Seat equities account.

Without the benefit of the Regulation-S.com exchange platform, a Regulation-S securities holder must deal with this process themselves. In many cases it could potentially cost smaller Investors more than the profits that the investment realised, or, for that matter, more than the entire value of the certificate. Another benefit to Regulation-S.com users is that if an issuing company did the original issue through Regulation-S.com, the company requires a contract with the issuer that will allow Regulation-S.com to clear the certificate on behalf of the client and replace for non-legended shares FOR FREE, at no cost to the account holder.

Major Demographic and Economic Factors

Regulation S, by its very design, allows non-US persons the opportunity to invest in American companies. This provides international investors several benefits:

• A stable and highly regulated investment environment
• A strong currency backing the investment
• A discount to market price

Regulation S Issuers

Fortune 500 companies with global operations and reputations can often gain by raising capital abroad. For equity offerings, foreign markets offer a substantially larger investor base, exemption from SEC registration, substantial transaction savings, as well as increased visibility by listing shares on foreign stock exchanges. For debt offerings, the same gains, as well as lower interest rates, are the main benefits of public offerings that are conducted outside the USA. These debt offerings can be denominated in US dollars and conducted in the global markets or denominated in a foreign currency and conducted in the country of that currency. Companies can often hedge foreign currency denominated transactions with currency swaps that convert all or part of their obligation back into US dollars.

These non-US offerings are conducted under an exemption from registration with the SEC provided by Regulation S under the Securities Act, although companies, if they desire, can do global registered offerings, conducted simultaneously in the USA and in the foreign markets.