Understanding the JOBS Act for Real Estate

Real Estate has become increasingly popular as an asset class in recent years and investors are eager to put their money into this space. However, the high capital requirements associated with real estate investments have been a large barrier for many individuals. From February 27th to March 3rd, the KoreSummit event “Real Estate + JOBS Act + Tokenization = Liquidity” will discuss the potential of blockchain technology and tokenization for transforming this industry.

 

Day 1

 

On day one of the summit, the discussion will be centered around why real estate is an attractive asset class and what steps can be taken to help make it more accessible to a wider range of investors. Douglas Ruark, Frank Bellotti, Nathaniel Dodson, and Oscar Jofre will speak during the first day’s panel, which is sure to provide valuable insight into the industry as well as the potential opportunities that could arise with the use of tokenization and blockchain technology.

 

Day 2

 

The second day of the summit will be focused on fractional ownership, a concept that makes it possible for multiple investors to own a single asset, and attracting the right investors. Laura Pamatian, Oscar Jofre, Peter Daneyko, Richard Johnson, Tyler Harttraft, Andrew Cor, and Jillian Bannister will be leading these discussions, which will provide attendees with an understanding of how fractional ownership can help to make real estate investments more affordable and accessible while attracting the right investors.

 

Day 3

The third day of the summit will be all about identifying which SEC exemption is right for raising Capital. Douglas Ruark, Peter Daneyko, Chris Norton, Nathaniel Dodson, Oscar Jofre, and Louis Bevilacqua will explain how to make the offering to retail, institutional, and accredited investors. These sessions will provide a great opportunity to learn from the experts and gain insight into how to ensure that your projects reach the right investors.

 

Day 4

 

The fourth day of the summit will focus on what companies should do once their real estate offerings are live. Panelists will include Kim LaFleur, Mona DeFrawi, Andrew Corn, Peter Daneyko, Amanda Grange, and Ryan Frank. This session is sure to provide attendees with valuable information about understanding what steps to take once their offering is live.

 

Day 5

 

The final day of the summit will look at private real estate shares and how they can be traded. Peter Daneyko, Kiran Garimella, Lee Saba, James Dowd, Frank Bellotti, and Laura Pamatian will provide insight into the concept of tokenization for private shares and how it can help to bring liquidity to this sector.

 

The upcoming KoreSummit is sure to provide invaluable insight into real estate and how blockchain technology and tokenization can help to make this asset more accessible and liquid. Attendees will have the opportunity to learn from industry leaders and gain valuable knowledge on how to successfully launch and promote their offerings. With the JOBS Act paving the way for real estate tokenization, this summit is an ideal way to get ahead of the curve in what is sure to be a huge market in the years to come. 

 

Sign up for the upcoming KoreSummit here

 

Regulation S: What is it and How is it Used?

Created to help companies raise money from foreign investors, Regulation S has been successful for some companies, while others have fallen into trouble by not following the regulations closely. Because of the uncertainty surrounding RegS for many issuers, Sara Hanks, CEO and co-founder of CrowdCheck, sheds some light on the subject.

 

What is Regulation S?

 

Regulation S is an offering type that companies can utilize to raise capital from investors outside of the US. According to Hanks, as Eurobonds grew in popularity throughout the 1970s and 80s, the circumstances that required an offering made primarily overseas to register with the SEC were unclear. “Section 5 of the Securities Act says that if you make a public offering of securities you have to register with the SEC, but it does not say in the United States. Of course, in 1933 they really weren’t thinking about cross-border deals. As the Eurobond market developed, where large companies were selling debt securities, there was a series of requests for interpretation as to the extent that something overseas needed to comply with US rules,” said Hanks when talking about the emergence of Reg S.  As cross-border markets developed, whether someone is or is not in the US really was brought into question. Over the next few decades, no-action letters began piling up and the SEC decided there needed to be a rule to give guidance as to what it means to not be making an offering in the US.

 

One of the key requirements is that companies only offer their securities to investors who are outside of the United States. This ensures that American investors are not being misled about the investment. Those using Reg S can raise more than the $75 million allowed with a Reg A+ raise.

 

What Challenges do Companies Face Using Reg S? 

 

The Key advantage of Regulation S is that it allows companies to tap into a larger pool of potential investors. “The primary use case of Reg S is a very large offering by a US or foreign company being made outside the United States. It was always intended for large transactions being made by large companies to sophisticated investors,” said Hanks. However, she notes that in the crowdfunding space, many issuers are still conducting a Reg S offering incorrectly. “They ignore the fact that the transaction has three separate categories and all of these are based on the likelihood of the transaction actually being made in the United States or the securities coming back to the United States,” said Hanks.

 

Accordingly to Hanks, the easiest use case is a foreign company selling under its own rules. An intermediate use case would be an SEC-registered company. An important consideration is the likelihood that the company would be using Reg S to get around the SEC’s registration rules and how much harm the securities would cause if they ended up in the US. But, for companies in the crowdfunding space that are not reporting companies, the rules are much more strict. Unfortunately, many of these companies are ignoring the rules that apply to non-reporting US companies, which is a significant problem.

 

For companies looking to use Regulation S, it’s important that they understand the offering and SEC’s requirements, otherwise, it could lead them into hot water.

What is Regulation S?

It is essential to be familiar with the different regulations that govern how companies can raise capital in today’s business world. One important rule is Regulation S. This article will give you a basic overview of Regulation S, how it affects businesses, and how companies can use it to raise capital.

 

What is Regulation S?

 

Regulation S is a set of rules that govern security offerings to offshore investors. It is an attempt by the SEC to clarify its role in regulating securities offerings sold by US companies outside the United States. The regulation allows companies to offer and sell securities without registering the offering with the SEC, as long as the securities are only offered and sold outside of the United States. This excludes investors within the US from participating in the offerings. If an offering is for foreign and domestic investors, it would not fall under Reg S exemptions because it would have to be registered with the SEC.

 

Benefits of Reg S

 

Regulation S is an important securities regulation because it allows companies to offer and sell securities offshore without registering with the SEC. This is important because it enables companies to raise money from investors worldwide, and it also protects investors because it ensures that all offerings are made lawfully. At the same time, it enables companies to have a greater reach for their security offerings, as they can now globally raise money from investors all over the world.

 

As it was designed, Reg S was always intended for large transactions made by large companies to sophisticated investors. The primary use case of Reg S is still the Euro bond or an extensive offering by a U.S. or foreign company that is made outside the United States. Because Reg S can be used for such a large-scale offering by large corporations, companies will always continue to use it as an option when they need to raise funds globally.

 

The Pitfalls of Regulation S

 

The problem is many companies do Reg S offerings incorrectly in this particular space of crowdfunding. Many think all they need to do is sell to somebody outside of the United States, but they ignore that Reg S has three separate categories. These categories are based on the likelihood of the transaction being made in the U.S. or the securities returning to the U.S. The most effortless use case of Reg S is a foreign company selling securities under their own rules. An intermediate use is a reporting company registered with the SEC. For startups, the rules of non-reporting U.S. companies are stricter, but many businesses are not complying with these rules.

How Can Companies Keep Their Offering Out of the US?

 

No offer sold under Reg S should be advertised or be made known in the U.S. To this effect, companies should Geo-fence any offering site so individuals with U.S. IP Addresses can not see what you are offering. However, if you have Geo-fenced your offer and implemented the proper protections to ensure a US investor cannot invest, and someone found their way around it, it’s not on you. Companies do not need to police the internet, but they should ensure that their Reg S offerings are only available internationally with Geo-fencing. 

 

While Reg S does not have as wide of a use case as Reg A or Reg D, Reg S is helpful if you feel you will exceed the $75 million of Reg A and can capitalize on international investors. However, companies must be aware that Reg S only tells how to comply with the U.S. rules, not another countries regulation. With most countries having restrictions on making offerings to less sophisticated investors, you want to ensure you meet all these standards if raising capital internationally. 

 

The Regulation S exemption was implemented to help companies raise capital from non-US investors without SEC registration. It has its benefits, but it is not always accessible or appropriate for every company.

Webinar sheds light on Digital Securities Terrain

The regulator’s message is clear: there’s no room for tampering with the regulation when it comes to capital raising, and many companies that invested time and energy on ICOs (Initial Coin Offering) are now facing the consequences.

But that doesn’t mean that the private capital markets are dead when it comes to digital assets, on the contrary. Companies have been tirelessly researching to find an alternative to ICOs that is compliant with regulations.

The private market industry is now being inundated by terms such as Digital Securities, Tokenization, STOs, ICOs. To decide the fate of their business in the digital arena, entrepreneurs need to be on top of the game and know the concepts, the differences, and who are the stakeholders behind every new term.

Having all this in mind we, at KoreConX, put together a Webinar “An Industry Evolving: Digital Securities, Tokenization, STOs, ICOs… What are they? How do they differ? Who’s regulating them?“.

To provide the public with the most up-to-date information about the topic, we invited two experts in the field. Oscar Jofre, CEO and Co-Founder of KoreConX, and Darren Marble, CEO and Founder of Issuance, will discuss the landscape for traded securities utilizing different forms of distributed ledger technology.

The webinar will happen this Wednesday, April 17th, at 11 am EDT.

Click here to register for free.

Click on the link below to watch our previous webinars:
Marketing Your Raise From Traditional Capital to Digital Securities