SEC Form S-8

What Is SEC Form S-8?

SEC Form S-8 refers to a filing that allows public companies to register securities it offers as part of an employee benefit plan. Companies are required by the Securities and Exchange Commission (SEC) to register these securities before they are issued under the Securities Exchange Act of 1933. The SEC generally intends these filings to shield investors from fraud by giving them accurate and sufficient information while adjusting the burden put on issuing entities as to reporting.

Understanding SEC Form S-8

SEC Form S-8 is a short-form registration statement that allows companies to issue shares to employees under particular conditions such as an employee benefit plan. This is a requirement by the SEC, so investors get the information they need to consider the purchase of another security appropriately. Customary filings like these also limit fraudulent practices, material misrepresentations, and different acts of trickiness.

Form S-8 is used when companies issue stock as part of an employee benefit plan including incentive plans, profit-sharing, bonuses, options, or similar opportunities. The SEC defines employee as anybody who serves the company in the capacity of an employee, general partner, director, consultant, trustee, or advisor. The term also extends to insurance agents who act exclusively in a business capacity for the company, as well as former employees and anybody connected with deceased employees.

The form must be filed before a company issues of these securities. In some cases, the SEC requires less comprehensive documentation for companies that have simpler operating structures or for smaller, more targeted issuances of securities. The SEC exempts some offerings from its registration requirement, including small or private offerings, interstate offerings, and securities issued by municipal, state, or federal governments.

The SEC collects fees from companies that complete S-8 filings. Registration fees for Form S-8 are based on the stock value and the amount of shares issued under the plan.

Special Considerations

There are restrictions on how the form can be used. The SEC stipulates that Form S-8 can't be used for securities issued to consultants and advisors in certain instances. In response to abuse of the form by companies in the past, the SEC stipulates that consultants and advisors who receive securities regarding services that are intended to give direct or indirect promotion of a company's stock don't qualify as participating in an employee benefit plan.

Form S-8 can't be used for issuances to any individual who markets or promotes the company's shares.

Here is a theoretical model that was common among companies that misused the Form S-8 filing. Company X hires an individual as a consultant. This individual, however, doesn't furnish the company with any consulting services, yet does accomplish promotional work to boost the company's share price. In exchange for this service, the company issues the individual stock and files a Form S-8. That person might wind up selling the stock for a profit, with the proceeds being returned back to the issuing company.

Form S-8 vs. Form S-1

Truncated or streamlined forms such as Form S-8 arise from situations in which some investor information required by SEC Form S-1 wouldn't be necessary for prospective investors to go with an informed purchase choice.

Most new issuances expect companies to file Form S-1 before a security might be listed on a public exchange. SEC Form S-1 includes a legal prospectus describing the issuance, notwithstanding details about recent sales of unregistered securities, financial statements, and other information relevant to a prospective investor. This form must be filed before any company can list its shares on a national exchange.

Highlights

• Form S-8 can't be used for issuances to consultants or advisors who advance a company's stock.
• Form S-8 refers to a filing that allows public companies to register securities it offers as part of an employee benefit plan.
• The filing is required by the Securities and Exchange Commission under the Securities Exchange Act of 1933.
• The form must be filed before a company issues of these securities.