Can A Private U.S. Company Access The European Capital Markets?

As U.S. companies look to expand their reach and growth prospects, Europe presents a lucrative market.

Expanding capital-raising efforts to the European Union (EU) allows U.S. companies to access a broader pool of investors, enhance global brand visibility, and diversify funding sources. However, navigating the complex securities regulations on both sides of the Atlantic requires strategic planning to avoid costly compliance issues. While EU regulations provide a common framework, each EU member state maintains its own securities, marketing, and consumer-protection rules. A compliant cross-border offer therefore must satisfy both EU-level requirements and the specific laws of each member state where investors are targeted.

This article explores the key pathway a U.S.-based company can use to offer their securities in Europe while maintaining compliance with U.S. securities laws.

Regulation S: Offshore Offerings Without U.S. Registration

What is Regulation S?

Regulation S provides a safe harbor for U.S. companies to offer securities exclusively outside the United States without registering with the Securities and Exchange Commission (SEC). To qualify, the offering must be an "offshore transaction," meaning no offers or sales can be made to any person in the U.S., and no "directed selling efforts" can occur within U.S. borders. This means all marketing and solicitation must be targeted solely at foreign investors.

Why Use Regulation S?

Regulation S is particularly useful for U.S. companies looking to raise capital from European investors, as it allows participation from both accredited and non-accredited foreign investors without needing to comply with burdensome Federal Securities Law requirements. Through Regulation S, for example, a Nevada corporation could offer securities to investors in Germany, Sweden, and Austria entirely outside the U.S. and avoid SEC registration requirements in the process.

Key Compliance Requirements

• Offers must be made outside the U.S., and investors must be outside the U.S. at the time of purchase.
• Marketing cannot target the U.S. market, including digital marketing that could be accessed by U.S. investors.
• Securities sold under Regulation S are "restricted securities," which means they cannot be resold to U.S. persons for at least one year.
• All offering materials must clearly state that the securities are not registered under U.S. law and cannot be sold in the U.S. or to U.S. persons unless a registration exemption applies

EU and Member State Regulatory Considerations

When targeting European investors in a Regulation S offering, U.S. companies must comply with EU-level rules (such as the EU Prospectus Regulation) and, in parallel, the national laws and supervisory practices of each relevant member state. The EU Prospectus Regulation establishes when an EU prospectus is required and when exemptions apply, but member states often add local conditions, including offering notifications or information sheets, selling-restrictions legends, language/translation requirements, advertising rules, and the need to engage locally authorized intermediaries for marketing under MiFID II.

Whether a transaction triggers an EU-level prospectus depends on offer scope and investor type. However, even where an EU prospectus is not required, companies frequently must address member-state private placement regimes and marketing rules administered by local regulators. These local requirements differ by jurisdiction and may change, so early scoping is critical.

1. Offers to Solely Qualified Investors

An offer exclusively to "qualified investors" (similar to an accredited investor in the U.S.) does not require a prospectus.

Member-state note: The definition and verification of 'qualified investors' and the process for marketing to them are implemented at the national level; some jurisdictions require prior notifications or impose selling-restrictions legends and language requirements.

2. Limited Number of Retail Investors

Offers to fewer than 150 non-qualified investors per EU country are exempt from the prospectus requirement. For example, a U.S. company could approach up to 149 investors in each of Germany, Sweden, and Austria each without triggering public offer rules.

Member-state note: The "fewer than 150 persons" exemption is an EU concept, but how you count investors, what constitutes an offer, and what marketing is permitted can vary by country. Some regulators treat any broad advertising as a public offer regardless of investor count.

3. Large Minimum Investments or High Aggregate Amount

Offers requiring a minimum investment of €100,000 per investor are exempt.

Member-state note: Local rules may specify form of investor confirmations, restrict installment payments, or require enhanced risk disclosures for high-denomination offers.

4. Small Total Offering Amount:

Offers not exceeding €1 million EU-wide within 12 months are exempt. However, the EU prospectus regulation allows its member states to set higher offering thresholds, up to €8 million. For example. Germany allows up to €8 million, so long as the company files a short information statement with the German securities regulatory authority, BaFin. Further, many countries that leverage higher national thresholds impose short-form information document filings, marketing content restrictions, and plain-language/translation requirements. These thresholds and procedures vary by jurisdiction.Best Practices for Cross-Border Private Offerings

• Engage EU-authorized and locally permitted intermediaries: Ensure any placement, solicitation, or advisory activity is performed by an investment firm authorized under MiFID II and permitted to operate in each target member state (whether via passporting or local authorization).
• Clear Disclosure and Documentation: Use a Private Placement Memorandum with country-specific selling restrictions and translated legends where required. Maintain a jurisdictional annex mapping the applicable EU exemptions and member-state requirements.
• Investor Verification and Record Keeping: Implement procedures to verify investor status under local definitions (e.g., qualified/professional investors) and to geo-fence and archive marketing communications per national advertising rules.
• Legal and Regulatory Coordination: In addition to U.S. counsel, retain EU regulatory counsel and local counsel in each target member state to scope exemptions, filings/notifications, translation needs, and marketing permissions.

Conclusion

Offering securities in the EU presents attractive opportunities for U.S. companies to access international investors and grow their capital base. However, it requires a strategic approach that aligns with both U.S., EU, and member-state securities laws.

By leveraging Regulation S and EU/member state private placement rules, U.S. companies can efficiently raise capital while minimizing regulatory burdens. This approach not only enhances global reach but also positions companies for sustainable growth in an increasingly interconnected financial market.

Navigating international securities offerings is complex. If you are interested in learning more about Regulation S or raising capital under federal securities law in general, please contact Patrick G. Costello at Patrick@bevilacquapllc.com, or (202) 869-0888 (ext. 130).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.