Regulation M
(Stabilization) Prospectus Disclosure

Summary

These clauses provide the Regulation M disclosure typically provided in prospectuses included in registration statements filed for public offerings of securities under the Securities Act of 1933 (Securities Act). These clauses include practical guidance and drafting notes. Rules 101 (17 C.F.R. § 242.101) and 102 (17 C.F.R. § 242.102) of Regulation M under the Securities Exchange Act of 1934 restrict the issuer, the underwriters, any selling shareholders, and other participants in a distribution of securities from bidding for, purchasing, or attempting to induce others to bid for or purchase the securities being offered (and certain related securities) during an applicable period of time. Rule 104 of Regulation M (17 C.F.R. § 242.104) regulates transactions undertaken to "stabilize" the market and is applicable to all offerings of securities regardless of whether there is a distribution. A distribution is an offering of securities, whether or not registered under the Securities Act, that is distinguished from ordinary trading transactions by the magnitude of the offering and the presence of special selling efforts and methods. Registered public offerings generally constitute distributions, but offerings of securities eligible for resale under Securities Act Rule 144A (17 C.F.R. § 230.144A) solely to persons that are or are reasonably believed to be "qualified institutional buyers" or "QIBs" (as defined in Rule 144A), in transactions exempt from registration under Securities Act Section 4(a)(2) (15 U.S.C. § 77d), Rule 144A, or Regulation D, and to persons not deemed to be "U.S. persons" for purposes of Regulation S, are specifically exempted from Regulation M. A private placement may or may not constitute a distribution. These clauses comprise (1) comprehensive Regulation M disclosure, appropriate when the issuer is participating in an offering that likely constitutes a distribution and in which stabilization transactions may occur, and (2) more limited disclosure for offerings in which the applicability of Regulation M and the likelihood of stabilization transactions is less certain. Disclosure related to Regulation M and the exception in Rule 104 for stabilization activities is typically included in the "Plan of Distribution," "Underwriting," or equivalent section of the prospectus. For more information regarding Regulation M, see Regulation Regulation M. For more on IPOs generally, see Initial Public Offerings Resource Kit. For a full listing of key content covering offering documents for securities offerings, see Offering Documents Resource Kit.