Regulation S was crafted as a safe harbor that allows US public companies to sell shares to non-U.S. citizens. In essence, while regulators wanted to assure that U.S. investors had adequate access to information about public companies, non-U.S. residents were not afforded the same protection. Those non-U.S. residents would be permitted to buy and sell shares, among themselves, even though the issuer had never registered those shares with the SEC.
In other words, companies were given license to do abroad what they could not do at home – dump shares on the marketplace without registration or disclosure.
To qualify for a Regulation S exemption, the shares must be sold offshore to a non-U.S. resident, and may not be sold back into the United States for one year. Those requirements are not as stringent as they may seem at first blush. The U.S. market is foreclosed to re-sales for one year, but that leaves the rest of the world – and the market for U.S. public companies is thriving around the globe.