1.1.4.1. Rule 903: Issuer Safe Harbor
A Regulation S offering can be combined with a Rule 144A offering and sold inside the U.S. to QIBs. An issuer can sell Regulation S securities immediately on a foreign exchange, but there are restrictions on when they can be sold to U.S. residents.
Rule 903 applies to offshore offers and sales of securities by issuers, distributors, and their affiliates or anyone acting on their behalf. Rule 903 recognizes three categories of securities, and additional conditions apply to two of these categories. Which category an offering falls into depends, broadly speaking, on how likely it is that the securities will eventually find their way into the hands of investors in the United States.
• Category 1—Low-risk offering. This category includes securities issued by foreign issuers with “no substantial U.S. market interest” in their securities, securities sold in an overseas directed offering, securities backed by the full faith and credit of a foreign government, and securities issued under a foreign employee benefit plan. There are no significant additional conditions for this category of securities.
Example: Nichtsehrgut Gmbh, a German company that has no substantial U.S. market interest in its securities, issues equity securities traded on a European exchange. It does not direc