Advising Clients on Using the Internet to Make Offers of Securities in Offshore Offerings

The use of the Internet in securities offerings is expanding. In offshore offerings, an offer via the Internet is accessible in "primary countries," or those where securities are being sold, as well as "secondary countries," where the securities are not being sold. Issuers, of course, do not want their offering regulated in countries where they are not selling securities. Regulators have issued guidance indicating that, despite the fact that an offer for securities may be accessible in their country via the Internet, they will not regulate the issue if the offering is taking place in other countries and the issuer does not "target" citizens or residents in "secondary countries." This article summarizes the statements of securities regulators, who have given such guidance, and outlines the key factors they examine to determine that the issuer is not "targeting" secondary country citizens. It assists attorneys develop a plan to avoid secondary country regulation. Finally, it suggests that those regulators who have not yet spoken on this issue should do so and conform to the guidance previous regulators have given.