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SEC Form SB-2

SEC Form SB-2

What Was SEC Form SB-2?

The term SEC Form SB-2 was a regulatory filing that was required by the Securities and Exchange Commission (SEC) for small businesses with incomes and public market floats of under $25 million. The form was utilized to register securities to be sold for cash. Small businesses were required to file small business disclosure and reporting forms with the SEC.

The reporting system for SEC Form SB-2, alongside other related forms, was dispensed with and supplanted by the SEC in 2008.

Grasping SEC Form SB-2

The Securities Act of 1933 was enacted in response to the stock market crash of 1929. Likewise alluded to as the truth in securities law, it was made as a method for safeguarding investors by ensuring that the financial statements of listed companies were more transparent and to set laws to forestall fraud in the securities markets.

Under the law, corporations are expected to file registration, standard statements, disclosures, and amendments to the SEC. Certain elements are exempt incorporating those with offerings that are private or limited in size, as well as any securities offered by various levels of government.

Private offerings, offerings limited in size, and securities offered by various levels of government are exempt from reporting.

Small businesses that met certain edges were additionally required to file public disclosures like Form SB-2: Registration Statement for Securities to be Sold to the Public by Certain Small Business Issuers. As referenced over, this form was required by any small business with revenues and a public market float of under $25 million.

A company's public market float is the portion of its shares that are accessible for purchase by the public, instead of those that are closely held by insiders โ€” company executives, their families, board members, or potentially different representatives โ€” or different elements.

The purpose of the form was to register any securities that available to be purchased for cash. Information found on the form included:

  • The name and address of the small business as listed on its charter
  • The jurisdiction of incorporation
  • Names and contact information of principal executives
  • Selling stockholder information
  • Number of shares
  • Offering price and terms
  • How the proceeds would be utilized
  • Associated risk factors

Special Considerations

The SEC adopted another system of disclosure rules for smaller companies that are required to file periodic reports and registration statements with the agency. This new system killed the requirement for small business forms. The effective date of these changes was February 4, 2008.

Smaller reporting companies โ€” as they're alluded to by the SEC โ€” are currently required to file similar forms as other corporations. The principal difference is that the information given by these companies might be marginally not the same as their bigger partners. Scaled disclosure requirements are noted in special sections on these forms.

The SEC has made changes to the capabilities of smaller reporting companies. As of July 2018, the definition permits any company with a public float of under $250 million to give scaled disclosures. This additionally applies to companies with incomes of under $100 million every year and no public float or one that is under $700 million.

Features

  • Form SB-2 was phased out in 2008, with small companies required to involve similar forms as their bigger partners.
  • SEC Form SB-2 was required by the Securities and Exchange Commission for small businesses with incomes and public market floats of under $25 million.
  • The form was likewise called the Registration Statement for Securities to be Sold to the Public by Certain Small Business Issuers to register securities to be sold for cash.