Regulation S Offering Representations and Covenants

Summary

These template representations and covenants may be used in a purchase agreement for an offering conducted outside the United States in reliance on Regulation S (17 C.F.R. § 230.901 through 905) under the Securities Act of 1933, as amended (Securities Act). This template includes practical guidance and drafting notes. A Regulation S offering will often be conducted concurrently with an offering being made in the United States pursuant to the exemption from registration provided by Rule 144A (17 C.F.R. § 230.144A) under the Securities Act, most commonly for debt securities. Accordingly, the template assumes a concurrent Regulation S and Rule 144A offering and thus contains provisions for the issuer and the “initial purchasers,” typically investment banking firms that purchase the securities and then immediately resell them to qualified institutional buyers (QIBs) pursuant to Rule 144A and outside the United States in accordance with Rule 903 of Regulation S. Issuers may rely on Regulation S, however, for other types of offerings (e.g., a standalone Regulation S offering, or a Regulation S offering conducted concurrently with a private placement conducted pursuant to Section 4(a)(2) of the Securities Act or Regulation D thereunder, or alongside a registered offering). In those instances, the representations and covenants can be modified or omitted as appropriate (for example, to apply to a placement agent or underwriter rather than to initial purchasers). The provisions are tailored to a debt offering made pursuant to Category 2 of Regulation S. There are three categories of offerings under Regulation S. Category 1, which applies to offerings by foreign private issuers (FPIs) without “substantial U.S. market interest” (or SUSMI) in either the class of equity being offered (for equity offerings) or the issuer’s total debt securities (for debt offerings), imposes the fewest requirements on the offering. Category 3, applicable to equity offerings by U.S. issuers and by non-reporting FPIs (if there is SUSMI in the class of equity being offered) and to debt offerings by non-reporting U.S. issuers, is the most restrictive. Category 2, which applies to debt offerings by reporting U.S. issuers and by reporting and non-reporting FPIs (if there is SUSMI in their total debt securities) and to equity offerings by reporting FPIs (if there is SUSMI in the class of equity being offered) imposes more requirements than Category 1 but is less restrictive than Category 3. Where applicable, the drafting notes included in this template provide revisions that may be considered if the offering is being made other than under Category 2. For a sample purchase agreement that be used in a securities offering under Regulation S or Rule 144A see Purchase Agreement (Rule 144A and/or Regulation S Debt Offering). For practical guidance on drafting a purchase agreement, see Purchase Agreement Drafting for a Rule 144A / Regulation S Debt Offering. For more information about Regulation S transactions generally, see Regulation S Transactions.