S-8 Filing

What Is a S-8 Filing?

A S-8 filing is a SEC filing required for companies wishing to issue equity to their employees.

The S-8 form outlines the details of an internal issuing of stock or options to employees similar to filing a prospectus. A company submits a S-8 filing for stock programs that are expected for the benefit of personnel that includes workers, directors, trustees, general partners, officers of the company, consultants and advisors.

Changes to better control S-8 filings were acquainted with prevent abuses of the issuance of stock. The Securities and Exchange Commission (SEC) sought to stop instances where issuers and stock promoters controlled S-8 filings to make unlawful offerings of securities.

A common scheme would incorporate an individual who was designated as a consultant to the company even however they never gave any consulting services. The individual could act to advance the stock to boost its market price. The individual would receive a large quantity of shares through an internal program registered through a S-8 filing and afterward quickly sell every one of the shares on the public market. The issuer of the stock would, thusly, receive the proceeds.

Rules Governing S-8 Filings

Registration requirements for S-8 filings were refreshed to ensure that consultants who receive stock in this manner also offer bona fide types of assistance to the issuer. Those services must not be connected with the sale of securities in a capital-raising transaction. The consultant's services also can't advance or keep a market for the issuer's securities.

The SEC acquainted further changes with the registration requirements to restrict companies that have completed reverse mergers with shell companies from making S-8 filings. The requirements state that a registrant for a S-8 filing must not be a shell company nor been a shell company for no less than 60 days prior to the filing. In the event that the issuer had been a shell company whenever prior it must file documents with the SEC no less than 60 before its S-8 filing to show that is not a shell company any longer.

S-8 filings remember extra prohibitions for who the equity shares might be distributed to. The securities can't be disbursed to individuals or entities that actively advance or otherwise promotion the stock through newsletters or different means.

Companies that submit S-8 filings must pay registration fees to the SEC based on the value of the stock and the total number of shares that will be issued in the plan. Shares and options offered through S-8 filings have dates that declare when they terminate in the event that they are not exercised.