Regulation S provides an exemption from the registration of securities offered and sold outside of the United States. There are two main exemptions under Reg S, which are called safe harbors. Rule 903 and Rule 904.
Rule 903 applies to offers of securities by issuers and distributors. Rule 904 applies to resales of already issued securities.
In order to qualify for exemption under both safe harbors,
First the securities must be offered and sold in an “offshore transaction,” which means that the buyer cannot be a “US Person” and cannot be physically located in the United States.
Second, there can be no “directed selling efforts” of the securities in the United States, meaning no advertising, marketing or promotional activities aimed at US investors.
Rule 903 adds certain offering restrictions based on the type of security, including a distribution compliance period during which time the securities may not be resold to a US Person. For US equity securities, this period is one year.
Rule 904 allows the immediate resale of securities in an offshore transaction with no directed selling efforts in the United States. The reseller in this case must not be the issuer, a distributor, an affiliate of the issuer or distributor, or anyone acting on their behalf.