Regulation D and Regulation S: A Practical Guide for Georgian and Foreign Issuers Raising Capital in the United States

The United States remains the world’s deepest and most liquid capital market. For Georgian and foreign companies and entrepreneurs seeking to raise capital from U.S. investors — or to offer securities to non-U.S. investors in transactions structured to avoid U.S. registration requirements — understanding the Regulation D and Regulation S framework is not optional. It is the legal foundation on which every valid exempt offering rests.

This article explains how both exemptions work, what documentation they typically require, and where Georgian issuers most commonly encounter legal problems.

Why Securities Registration Matters

The U.S. Securities Act of 1933 requires that any offer or sale of securities in the United States be registered with the Securities and Exchange Commission (SEC) — unless an exemption applies. Registration is expensive, time-consuming, and may impose ongoing public disclosure obligations. For most private companies and early-stage issuers, registration is not a realistic option.

Regulation D and Regulation S are among the two primary exemptions that allow issuers to raise capital without registration. They operate differently, apply to different investor categories, and carry different compliance obligations. Many Georgian and foreign issuers attempt to use both simultaneously — which is entirely possible, but often requires careful structuring.

Regulation D: Raising Capital from U.S. Investors

Regulation D allows companies to raise capital from U.S. investors without SEC registration, subject to specific conditions. The two most commonly used provisions are Rule 506(b) and Rule 506(c).

Rule 506(b) permits an issuer to sell securities to an unlimited number of accredited investors and up to 35 non-accredited but sophisticated investors, provided that no general solicitation or advertising is used. “General solicitation” generally refers to any broadly directed communication — including websites, social media posts, or conference presentations — that could reach the general public. Under Rule 506(b), the offering is expected to remain genuinely private.

Rule 506(c) permits general solicitation — meaning the issuer can openly advertise the offering — but every purchaser must be a verified accredited investor. Verification cannot be self-certification. The issuer is expected to  take reasonable steps to verify accredited investor status, which in practice may involve reviewing tax returns, financial statements, or obtaining written confirmation from a licensed professional.

An accredited investor is broadly defined as an individual with annual income exceeding $200,000 (or $300,000 jointly with a spouse) in each of the two preceding years, or with a net worth exceeding $1 million excluding the primary residence. Institutional accredited investors include banks, registered investment companies, and entities with assets exceeding $5 million.

Within 15 calendar days of the first sale in a Regulation D offering, the issuer is required to  file a Form D with the SEC. This is a notice filing, not a registration — but failure to file carries consequences, including jeopardy to the exemption and possible bars on future exempt offerings.

Regulation S: Offshore Offerings to Non-U.S. Persons

Regulation S provides a safe harbour from U.S. registration requirements for offers and sales of securities that occur outside the United States. The core principle is that if a transaction occurs offshore and involves non-U.S. persons, the U.S. registration requirements generally do not apply.

Two conditions are typically required to be met. First, the offer or sale must be made in an offshore transaction — meaning neither party is in the United States at the time the offer is made and accepted, and the securities are not sold on a U.S. exchange. Second, no directed selling efforts should be made in the United States — meaning the issuer does not take steps specifically designed to condition the U.S. market for the securities.

Regulation S is divided into three categories. Category 1 applies to foreign issuers with no significant U.S. market interest — the requirements are minimal. Category 2 applies to reporting U.S. issuers and certain foreign issuers — it imposes a 40-day distribution compliance period during which the securities may not be resold in the United States or to U.S. persons. Category 3, which applies to most other issuers including Georgian and foreign companies, imposes a one-year distribution compliance period and typically requires specific offering restrictions and legends on the securities.

Using Regulation D and Regulation S Together

It is common — and entirely lawful — to structure an offering that simultaneously uses Regulation D for U.S. investors and Regulation S for non-U.S. investors. This dual-exemption structure may enable an issuer to raise capital from a global investor base in a single round, without U.S. registration.

The key requirement is that the two tranches are clearly documented as separate offerings with separate subscription agreements, and the issuer seeks to ensure that no Regulation S purchaser is in fact a U.S. person. Confusion between the two tranches — or failure to maintain proper records identifying which investors participated under which exemption — is one of the most common compliance failures observed in practice.

Documentation Requirements

A properly structured exempt offering under Regulation D and/or Regulation S typically requires, at minimum:

  • A Private Placement Memorandum (PPM) — the offering document disclosing the business, the terms of the securities, the use of proceeds, and the risk factors.
  • Subscription Agreements — signed by each investor, containing representations as to accredited investor status (for Regulation D) or non-U.S. person status and offshore transaction compliance (for Regulation S).
  • Investor Questionnaires — gathering the factual basis for the issuer’s reliance on the relevant representation.
  • A Form D filing — required for Regulation D within 15 days of the first sale.
  • Transfer restriction legends — required on all securities issued under Regulation S Category 3 during the distribution compliance period.

The Most Common Mistakes Georgian and Foreign Issuers Make

Based on our experience advising Georgian and foreign companies on U.S. capital markets transactions, the following errors appear to recur most frequently:

General solicitation under a Rule 506(b) offering. Publishing details of the offering on a public website or LinkedIn before locking down the investor list may jeopardize the exemption.

Self-certified accreditation under Rule 506(c). Allowing investors to simply declare that they are accredited — without any verification — can expose the issuer to a potential loss of the exemption.

Missing the Form D filing deadline. The 15-day window is relatively strict. Late filing does not automatically void the exemption, but it may complicate future reliance on Regulation D.

Failing to maintain the Regulation S resale restrictions. Allowing securities issued under Regulation S to be resold in the United States during the compliance period effectively convert the transaction into an unregistered domestic offering.

Integration with prior or subsequent offerings. The SEC may treat separate offerings as a single offering if they are too closely related in time, investor base, or use of proceeds — potentially placing at risk the exemption for all of them.

Conclusion

Regulation D and Regulation S are powerful tools for Georgian and foreign issuers accessing international capital — but they require precise execution. A structuring error at the documentation stage, or a single communication that crosses the line into general solicitation, can potentially invalidate an entire offering and expose the issuer to a risk of SEC enforcement action.

Metric Law/Tax advises Georgian and foreign companies on cross-border private placements, working in coordination with U.S. securities counsel. If you are planning a capital raise involving U.S. investors or seeking to structure an offshore offering, we would be glad to discuss relevant aspects of the legal framework and the documentation required before any communications with potential investors begin.

This article is provided for general information only and does not constitute legal advice. For advice on a specific matter, please contact Metric Law/Tax.

© 2026 Metric Law/Tax · legal-metric.com