Exempt offerings to institutional and offshore investors, meaning Rule 144A placements to qualified institutional buyers and Regulation S sales abroad, structured so the exemptions hold and the securities trade as intended.
Rule 144A is not an exemption issuers use. The issuer sells to initial purchasers under Section 4(a)(2), and the purchasers rely on 144A when they resell to qualified institutional buyers: institutions that own and invest at least $100 million in securities of unaffiliated issuers, or $10 million for a registered broker-dealer. One further condition decides more deals. The securities must not be of a class listed on a U.S. exchange, so a listed company can place convertible notes under 144A, given a conversion premium of at least ten percent, but never its own common stock.
Regulation S is the offshore mirror: offers and sales outside the United States to non-U.S. persons, sorted into categories with a distribution compliance period of 40 days for most debt and six months for a U.S. reporting issuer's equity, a year if the issuer does not report. Most cross-border deals run both tranches under one offering memorandum, which, unregistered as it is, answers in full under Rule 10b-5.
We act for issuers, sponsors and initial purchasers on the structure, the memorandum and the legends, and for the holder who later wants a legend removed.
Structuring and documenting resales to qualified institutional buyers under Rule 144A, covering the initial-purchaser model, QIB eligibility, and the conditions an offering must satisfy to sit within the safe harbor.
Sales to non-U.S. persons outside the United States under Regulation S, with the category analysis, the selling and distribution restrictions, and any distribution-compliance period that applies to the securities.
Cross-border deals that pair a domestic 144A tranche with an offshore Reg S tranche under a single offering document, keeping the two consistent while each follows its own selling and resale rules.
Drafting the offering memorandum that stands in for a registered prospectus, and running the diligence behind it, so the issuer, the securities, the risks, and the use of proceeds are described to an antifraud standard.
The restrictive legends, transfer mechanics, and resale pathways that travel with restricted securities, written into the deal so later transfers stay within an exemption and the safe harbor is not lost.
Purchase and underwriting agreements, representations and covenants, comfort and legal-opinion deliverables, and the closing mechanics that carry an exempt offering from launch to settled capital.
Rule 144A(d)(4) gives holders and prospective buyers the right to demand, from an issuer that does not file with the SEC, a brief description of its business and two years of reasonably current financial statements. The covenant goes in the indenture; a private issuer that cannot produce audited numbers is not a 144A issuer.
Regulation S bars any activity that could reasonably be expected to condition the U.S. market for the securities, for the whole distribution compliance period. A deal website readable from Chicago without a gating page, or a release wired to U.S. financial media, can count. The purchase agreement binds every distributor to the offering restrictions.
Sections 11 and 12(a)(2) reach registered offerings; an offering memorandum answers under Rule 10b-5, which requires scienter but carries no statutory due-diligence defense. Initial purchasers therefore insist on a negative-assurance letter from each counsel and a comfort letter from the auditors at pricing and again at closing. The record of care is the defense.
Rule 144 lets a non-affiliate resell 144A securities after six months if the issuer files current reports, and after a year if it does not; affiliates stay under volume limits. The legend comes off when the issuer instructs the transfer agent, on an opinion of counsel, so the resale route is drafted at the outset.
The 144A tranche and the Reg S tranche sit in separate global notes with separate identifiers. During the distribution compliance period a transfer from the Reg S note into the 144A note needs a QIB certification, and the reverse needs a Reg S certification. The trustee refuses transfers that arrive without them.
In the European Union an offer made only to qualified investors, or in denominations of at least 100,000 euros, sits outside the public-offer prospectus rule, and a PRIIPs legend keeps it from retail. The Reg S category itself turns on whether the issuer has a substantial U.S. market interest, a defined test, not a feeling.
Before anyone is approached, the deal is split into its tranches, 144A to QIBs at home and Reg S offshore, with the Reg S category, distribution-compliance period, and initial-purchaser mechanics fixed so the marketing that follows cannot cost the exemption.
The offering memorandum is drafted to an antifraud standard while diligence runs beneath it on the issuer, the securities, the risks, and the use of proceeds, because an unregistered document still answers for every sentence. The 10b-5 record is built before launch.
The deal goes out to the eligible base only: bookbuilding among QIBs and offshore accounts, pricing, and a purchase agreement with the initial purchasers carrying the representations, covenants, comfort letters, and legal opinions the closing turns on.
Funds move against global notes legended for each tranche, with restricted CUSIPs, transfer mechanics, and DTC and Euroclear/Clearstream settlement, and the securities begin their restricted life, tradable only along the resale pathways written into them at stage one.
The exemption is decided before the first investor hears the deal, and the rest of the work proves it.
A Rule 144A offering is a private placement built in two steps. The issuer sells the securities to one or more investment banks acting as initial purchasers under the Section 4(a)(2) private-offering exemption, and the banks immediately resell them to qualified institutional buyers in reliance on Rule 144A, a safe harbor that treats such resales as outside the Securities Act's registration requirement. A qualified institutional buyer is an institution that owns and invests on a discretionary basis at least $100 million in securities of issuers it is not affiliated with; a registered broker-dealer qualifies at $10 million. The securities must not be of a class listed on a U.S. exchange when issued, the offering is documented with an offering memorandum rather than a prospectus, and the securities are restricted until Rule 144's holding period has run or a registration is filed.
Regulation S is the offshore counterpart. It provides that offers and sales made outside the United States to non-U.S. persons fall outside the registration requirements of the Securities Act. Rule 144A addresses the U.S. institutional side of a deal and Regulation S the offshore side. Many cross-border placements run the two together under a single offering document, with a 144A tranche sold to U.S. qualified institutional buyers alongside a Reg S tranche sold to offshore investors, and each tranche follows its own selling and resale rules.
In the 144A tranche, only qualified institutional buyers: institutions such as insurers, investment companies and pension plans that own and invest on a discretionary basis at least $100 million in securities of unaffiliated issuers, banks that also show $25 million of audited net worth, and registered broker-dealers at $10 million. The seller must reasonably believe the buyer is a QIB, which is why the purchase agreement and the trade confirmations carry QIB representations. In the Reg S tranche, anyone who is not a U.S. person as the regulation defines the term. The definition excludes U.S. residents and entities organized here, as expected, and also catches a discretionary account managed by a U.S. dealer and an offshore vehicle formed by a U.S. person to buy unregistered securities. Each tranche's investors receive the legend that matches the rule they bought under.
An offering memorandum, which no regulator reviews and which looks almost exactly like a prospectus for a reason. Initial purchasers expect risk factors, audited financial statements and a description of the notes at the standard a registered deal would carry, because Rule 10b-5 applies to every statement in it and the banks' protection is the diligence record rather than a statutory defense. For an issuer that does not file reports with the SEC, Rule 144A(d)(4) adds a covenant to furnish holders, on request, a brief business description and two years of financial statements for as long as the securities are outstanding. The memorandum closes with the transfer restrictions and the legends, which are the part of the document that still matters five years later.
Yes, and the regulatory side of an exempt deal is mostly the filings issuers forget. The SEC does not review an offering memorandum and a sale to initial purchasers under Section 4(a)(2) files no Form D, so the touchpoints are elsewhere: a Rule 135c notice if the deal is announced publicly, a Form 8-K under Item 3.02 within four business days when a listed issuer sells unregistered equity or convertible securities amounting to one percent or more of the class, and the Rule 144A(d)(4) information covenant for a non-reporting issuer. Offshore, each venue's private-placement and financial-promotion rules apply to the Reg S tranche, and we coordinate locally admitted counsel where a jurisdiction requires it. We have represented clients in matters before the SEC, and the better outcome is a deal file that never becomes one.
Before the term sheet names the exemption. Two choices made at that stage cannot be unmade later. The first is the fungibility test in Rule 144A(d)(3), applied when the securities are issued: a convertible exchangeable into listed common stock passes if its conversion premium is at least ten percent, while a direct placement of that stock fails, so the instrument itself is partly a legal decision. The second is whether the notes are 144A-for-life or carry registration rights, which commits the issuer to a registered exchange offer within a set number of days of closing and to additional interest if it is late. Both are cheapest to settle while the banker's first draft still reads to be determined.
The registered route to the public market, for when a company outgrows exempt placements and prepares for a full underwritten IPO and a listing.
Explore →Raising additional capital after the first sale, through follow-on and secondary offerings for issuers and selling holders already in the market.
Explore →Convertible notes and other hybrid instruments, frequently placed under 144A, sitting between a company's equity and its debt.
Explore →Private investment in public equity and registered direct deals, another exempt or hybrid path to capital for issuers already listed.
Explore →Reviewed by Jonathan D. Herpy, Sr., Senior Partner · Last updated October 2026 · Educational overview · Not legal advice
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