On September 30, 2026, the SEC asked for comment on six possible new routes to accredited investor status, including a CPA license, the CFA charter, CFP certification, certain FINRA licenses and a new FINRA exam. For sponsors weighing Regulation S vs Regulation D, the more useful detail is what the notices leave alone. They concern only who counts as accredited under Regulation D, and Morrison Foerster noted in an October 1 client alert that nothing is effective until the SEC issues an order. Regulation S, the rule for offers and sales made outside the United States, does not depend on accredited status at all.
That gap explains how the two rules relate. Regulation D asks who the investor is, while Regulation S asks where the offer and the sale take place, so a sponsor does not have to choose one instead of the other. The SEC's own rule text allows both on the same deal, with Regulation D covering investors in the United States and Regulation S covering investors abroad. A sponsor that plans both lanes before the next raise, rather than adding an offshore lane halfway through, will find its marketing, onboarding and records simpler to keep in order. Our guide to Regulation S offerings covers the offshore lane in depth.
How Regulation D Works for a Real Estate Raise
Most U.S. sponsors already raise equity under Regulation D, where Rule 506 offers two paths. Under Rule 506(b), a sponsor may not use general solicitation or advertising, and it may sell to no more than 35 investors who are not accredited in any 90 calendar day period, as long as those investors receive detailed disclosure documents. Under Rule 506(c), the sponsor may advertise broadly, but every purchaser must be accredited and the sponsor must take reasonable steps to verify that status. Our comparison of 506(b) and 506(c) for real estate sponsors sets out how sponsors choose between them.
Both paths share the same filing rhythm. According to the SEC, a company must file a notice on Form D within 15 days after the first sale of securities in the offering, and states may still require their own notice filings and collect fees. The September 30 notices matter on this side of the deal, because the SEC expects that confirming a publicly verifiable credential will often cost less than checking income or net worth. Our guide to accredited investor verification under 506(c) explains the methods available today.
How Regulation S Works Outside the United States
Under the SEC's rules, securities offered and sold outside the United States in line with Regulation S need not be registered under the Securities Act of 1933. Two general conditions apply to every sale under the issuer safe harbor. The offer or sale must be made in an offshore transaction, and there must be no directed selling efforts in the United States. The rule defines directed selling efforts as any activity that could reasonably be expected to condition the market in the United States for the securities being offered.
Most U.S. real estate sponsors issue equity from a U.S. company that does not file reports with the SEC, which places them in Category 3, the strictest tier of the rule. In that tier, each buyer certifies that it is not a U.S. person and is not buying for one, and the securities carry a legend restricting transfer. The issuer must also be required, by contract or by its governing documents, to refuse to register any transfer that breaks the rule. A distribution compliance period applies as well, lasting one year for a company that does not file SEC reports and six months for one that does. The SEC also deems equity of a U.S. issuer sold this way to be restricted securities under Rule 144.
Regulation S vs Regulation D in Practice
Set side by side, the two rules answer different questions, and the differences show up in daily operations as much as in the offering memorandum. Four points matter most when a sponsor considers a second lane.
- Who qualifies. Rule 506(c) turns on accredited status that the sponsor verifies, while Regulation S turns on an offshore transaction and a buyer who certifies that it is not a U.S. person.
- Marketing. Rule 506(c) allows general solicitation in the United States, while Regulation S prohibits directed selling efforts aimed at the U.S. market.
- Resale. Category 3 equity carries a distribution compliance period, during which offshore buyers may not resell to U.S. persons without registration or another exemption.
- Tax reporting. U.S. investors in a partnership usually receive a K-1, while investors abroad may invest through a U.S. C corporation blocker, which holds the partnership interest and reports their dividends on Form 1042-S.
None of these differences makes one rule better than the other. They follow from the fact that the SEC regulates the U.S. market for securities, so Regulation D sets who may buy inside that market and Regulation S sets how a sponsor stays outside it.
Running Both Rules on the Same Deal
The SEC's rule text anticipates the pairing. Rule 500(g) of Regulation D says Regulation S may be relied on for offshore sales even if coincident offers and sales are made under Regulation D inside the United States. Investors who buy under Regulation S are not counted toward Regulation D purchaser limits, and their money is left out of the aggregate offering price. The provision does not apply if the sponsor elects to rely only on Regulation D for its sales abroad.
The practical difficulty lies in marketing. A 506(c) raise lets a sponsor advertise on LinkedIn, at conferences and on its website, while the offshore lane must avoid activity that conditions the U.S. market for the same securities. How a sponsor's U.S. advertising interacts with its offshore lane is a question securities counsel should settle in writing before either lane opens. In practice this points to separate materials and onboarding flows for each lane, so the record shows which investors came through which door.
Records are the second pressure point. Each lane collects different documents at onboarding, such as accredited investor verification for U.S. investors and a certification of status outside the United States for investors abroad, together with the right Form W-9 or W-8 certificate for tax. Distributions then follow two reporting paths, which our guide to Forms 8804, 8805 and 1042-S explains. Running both lanes from one set of records lets the sponsor reconcile commitments, ownership and distributions across the whole deal.
Investors in both lanes carry the same property risks, including loss of capital, illiquidity, falling property values, tenants leaving and distributions not being paid. Investors abroad also face currency movements and the chance that securities or tax rules change in their home country or in the United States. Offering documents for each lane should describe those risks in the same plain terms.
What Sponsors Can Do Before the Next Raise
The work that makes a raise with two lanes run well happens before the first investor call. The steps below run in order because each decision shapes the next one.
- Decide with securities counsel whether the U.S. lane will use Rule 506(b) or Rule 506(c), and whether to add a Regulation S lane abroad.
- Confirm the issuer's Regulation S category and the length of its distribution compliance period, then build the legend, certifications and transfer restrictions into the offering documents.
- Agree with your CPA how investors abroad will hold their interests and which tax forms each lane will receive.
- Write separate marketing rules for each lane, including which channels the 506(c) campaign may use and who may speak with investors abroad.
- Set up onboarding and records so that verification, certifications and tax forms for both lanes sit in one place.
Raveum offers sponsors an investment management platform, fund administration, a global raise track under Regulation S and an operating partnership for selected sponsors, and sponsors keep their investor relationships, their property and their business plan. U.S. investors come in under Rule 506(c) and receive K-1s, while offshore investors invest through a U.S. C corporation blocker that holds the partnership interest, and Raveum reports their dividends on Form 1042-S and files Form 1042. See how the Raveum Sponsor Program works.
Two Lanes Into One Deal
The September 30 notices may widen the group of people who can invest in a 506(c) offering, but they change nothing about the offshore lane, which never depended on accredited status. That is the clearest way to see Regulation S vs Regulation D for a real estate sponsor. One rule governs who may buy inside the United States, the other governs how a sponsor sells outside it, and a single deal can use both at once. A sponsor that designs the two lanes together before the raise begins will meet whatever the SEC decides with its structure already in place. Our guide to Regulation S offerings walks through each step of the offshore lane.
Frequently Asked Questions
Can a Sponsor Use Regulation S and Regulation D on the Same Deal?
Yes. The SEC's rules allow a sponsor to rely on Regulation S for sales outside the United States even when it makes coincident offers and sales under Regulation D inside the United States. Investors who buy under Regulation S are not counted toward Regulation D purchaser limits. Securities counsel should confirm how the two lanes are documented and marketed before the offering opens.
Do Investors Abroad Need to Be Accredited Under Regulation S?
No. Accredited investor status is a Regulation D concept, and Regulation S instead requires an offshore transaction with no directed selling efforts in the United States. For a U.S. sponsor's equity, each buyer must certify that it is not a U.S. person. The investor's own country may still set its own eligibility rules, which local counsel should confirm.
How Long Is the Distribution Compliance Period for Sponsor Equity?
For equity issued by a U.S. company that does not file reports with the SEC, the distribution compliance period under Category 3 of Regulation S lasts one year. It is six months for companies that file SEC reports. The period begins when the securities are first offered under Regulation S or when the offering closes, whichever is later.
What Are the Main Risks of Adding a Regulation S Lane?
The main compliance risk is losing the exemption, for example if marketing in the United States is treated as directed selling efforts for the offshore securities. Investors abroad also carry the same property risks as U.S. investors, including loss of capital and illiquidity, plus currency movements. Sponsors should have securities counsel check the marketing plan for both lanes before launch.
When Should a Sponsor Bring In Securities Counsel?
Before the offering documents are written. Counsel decides the Rule 506 path, confirms the Regulation S category, writes the legend, certifications and transfer restrictions, and sets marketing rules for each lane. A CPA should join at the same stage to plan the tax structure for investors abroad, including any blocker corporation and the forms each investor will receive.
This article is for general education only and is not legal, tax or investment advice. Securities and tax rules change and depend on each sponsor's facts, so work with qualified securities counsel and tax advisors before launching an offering. Real estate investments involve risk, including loss of capital, illiquidity and changes in property values. Offerings on Raveum are available to eligible investors only and are not open to the general public.
