Question: May foreign issuers use Regulation D?

Answer: Yes. Disclosure requirements for foreign private issuers are set forth in Rule 502(b)(2)(i)(C). [Jan. 26, 2009]

Question: Is Regulation D available to an underwriter for the sale of securities acquired in a firm commitment offering?

Answer: No. As Rule 500(d) states, Regulation D is available only to the issuer of the securities and not to any affiliate of that issuer or to any other person for resales of the issuer’s securities. See also Rule 502(d), which limits the resale of Regulation D securities. [Jan. 26, 2009*]

Question: A corporation proposes to implement an employee stock option plan for key employees. Can the issuer rely on Regulation D for an exemption from registration for the issuance of securities under the plan?

Answer: The corporation may use Regulation D for the sale of securities under the plan to the extent that such offering complies with Regulation D. The corporation may also want to explore whether the exemption from registration in Securities Act Rule 701 is available. Rule 701 was adopted after Regulation D and was designed specifically for stock option and other compensatory employee benefit plans. In a typical plan, the grant of the options will not be deemed a sale of a security for purposes of the Securities Act. The issuer, therefore, will be seeking an exemption for the issuance of the stock underlying the options. The offering of this stock generally will commence when the options become exercisable and will continue until the options are exercised or otherwise terminated. Where the key employees involved are directors or executive officers, such individuals will be accredited investors under Rule 501(a)(4) if the corporation is relying on Regulation D and they purchase securities through the exercise of their options. Other key employees may be accredited as a result of net worth or income under Rules 501(a)(5) or (a)(6). [Jan. 26, 2009]