SEC Form S-3

What Is SEC Form S-3?

Form S-3 is a simplified security registration form used by businesses that have previously met other reporting requirements. The form registers securities with the SEC under the Securities Act of 1933 for U.S.- based companies as it were.

Companies looking to use the S-3 must have satisfied all reporting requirements of the Securities Exchange Act of 1934 from sections 12 or 15(d) that follows the assumption that companies seeking to register, have some form of security filed with the SEC.

SEC Form S-3 Explained

The SEC form S-3 is sometimes filed after a initial public offering (IPO) and is generally filed simultaneously with common stock or preferred stock offerings.

There are different requirements that must be met for a business to file the S-3 form. In the 12 months prior to finishing up the form, a company must have met all debt and dividend requirements. The SEC Act of 1933 also requires that these forms be filed to ensure that essential facts about the business are disclosed upon the company's registration of securities. Doing so allows the SEC to give investors with specifics about the securities being offered and works to take out fraudulent sales of such securities.

Composition of the SEC Form S-3

Form S-3 is essentially composed of two parts. Part one consists of a cover page, risk factors, and a prospectus that will ultimately be made accessible to every expected investor. Part two consists of exhibits, undertakings, and various different disclosures that are not ordinarily distributed to investors yet are made accessible to the public through the SEC's Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system.

The prospectus essentially consists of a summary section that lays out all critical information about the security offering, including the security type, in the event that it is a overallotment option, the exchange (if anyplace it will be listed, and the way in which proceeds will be used. Issuers that are genuinely new or genuinely unknown are likely to incorporate business strategy, market strengths, and frequently basic financial information about the company as well. Pricing terms are excluded until the last draft of the prospectus, the version that is delivered to investors with confirmations of sales from the underwriters.

The disclosure of risk factors is generally partitioned into subsections, including risks applicable to the offering itself and risks associated with the issuing company. Most risk factors can be found on the issuing company's most modern Form 10-K or Form 10-Q.

Extra sections that must be remembered for the S-3 form, contingent on the type of issuing company and the type of security being issued, incorporate disclosure of the ratio of earnings to fixed charges, plan of distribution, and full descriptions of the securities that are being registered.

In most instances, the S-3 form also discloses information about the expertise of the issuer's accountants and counsel that offer validation of the securities available to be purchased.

Form S-3 vs. Form S-1

The S-3 form follows a simplified process. The S-1 form filing, then again, is used as the initial registration for new securities issued by public companies in the United States. The filing must be completed before shares can be traded on a national exchange. Most companies file the S-1 form ahead of their IPO.

At the point when a company completes the S-1 filing, it must disclose several key details about the company including how it intends to use the capital raised, its business model, alongside a prospectus about the security.

Highlights

• SEC Form S-3 is a regulatory filing that provides simplified reporting for issuers of registered securities.
• A S-3 filing is used when a company wishes to raise capital, usually as a secondary offering after an initial public offering has previously happened.
• To use the simplified process, firms must first meet a certain set of qualification criteria.