Public and Private Offerings

Question 1

Form S-1

Answer 1

This is the basic registration form that most companies conducting initial public offerings are required to use. Foreign issuers file an equivalent document, which is Form F-1.

Question 2

Form S-3

Answer 2

An S-3 registration statement—often referred to as a short form registration statement—is used by seasoned issuers of securities. The minimum requirement to file an S-3 is a public float of $75 million in voting and non-voting common equity. An issuer is prohibited from filing an S-3 registration statement if it has failed to pay a dividend on any issue of its preferred stock, failed to pay interest on a bond, or if it’s delinquent in its SEC filings. Foreign issuers file an equivalent document, which is Form F-3

Question 3

Form S-4

Answer 3

For situations in which securities are being offered as a result of business combinations due to mergers, acquisitions, consolidations, reclassifications of securities, or transfers of corporate assets, the SEC requires the issuer to file Form S-4. The SEC believes that investors should be afforded the protection of securities laws when securities are offered in this manner.

Question 4

Form S-8

Answer 4

Form S-8 is filed with the SEC to register securities that are made available through employee benefit plans.

Question 5

Prospectus delivery requirements

Answer 5

If an issuer is already listed on an exchange and sells a new issue of common stock, there’s no prospectus delivery requirement. If the offering is an IPO and the issuer will be listed on an exchange, the prospectus delivery requirement is 25 days. On the other hand, if the offering is to be quoted on the OTCBB (which is not an automatic quotation system), the delivery requirement is 90 days for an IPO and 40 days for a secondary offering

Question 6

Blue Sky Laws

Answer 6

Federal covered securities include securities that are listed on the New York, Nasdaq, and American stock exchanges, as well as mutual funds. Although federal covered securities are not subject to state registration requirements, State
securities administrators may still require an issuer to file Consent to Service of Process and may also require issuers to provide copies of the documents that are filed with the SEC.

Question 7

SEC Rule 3a4-1

Answer 7

Associated Persons of Issuers
In small offerings, an issuer may use its personnel to sell its securities. According to SEC Rule 3a4-1, associated persons of an issuer may participate in a securities offering without being defined as a broker-dealer, provided the associated person:
- Doesn’t receive commissions or transaction-based compensation in connection with the offer.
- Is not associated with a broker-dealer.
- Is not subject to statutory disqualification.

Question 8

SEC Rule 3a4-1 – Associated Persons of Issuer Criteria

Answer 8

In addition, associated persons of the issuer must meet any one of the following three criteria:

1. The associated person limits sales activities to financial institutions (broker-dealers, registered investment advisers, registered investment companies, banks, savings and loans, and trust companies), or to certain very limited types of transactions (e.g., employee benefit plans for stock options or retirement
   plans) .
2. The associated person must primarily perform other duties for the issuer (or will be performing these functions once the offering ends), has not been associated with a broker-dealer during the last year, and doesn’t participate in sales of securities for any issuers more than once per year.
3. The associated person prepares written communications (approved by an officer or director), but doesn’t solicit potential investors.

Question 9

Seasoned Issuer

Answer 9

A seasoned issuer is one that’s eligible to use Form S-3 or Form F-3 to register a
primary offering of securities.

Question 10

Well-Known Seasoned Issuer (WKSI)

Answer 10

 The issuer must be eligible to register on Form S-3 (the short form of the registration statement) or Form F-3 (the registration statement for certain foreign private issuers).
 Within 60 days of the determination of eligibility, the issuer must have either:
‒ A worldwide market value of outstanding voting and non-voting common equity held by nonaffiliates of $700 million or more, or
‒ In the last three years, issued at least $1 billion aggregate principal amount of non-convertible securities, other than common equity, in primary offerings for cash, not exchange, registered under the Securities Act of 1933
 The issuer may not be ineligible.

Question 11

Unseasoned Issuer

Answer 11

An unseasoned issuer is one that’s required to file reports under Section 13 or Section 15(d) of the Securities Exchange Act of 1934, but doesn’t meet the requirements to file on Form S-3 or Form F-3 for a primary offering of its securities.

Question 12

Non-Reporting Issuer

Answer 12

A non-reporting issuer is one that’s not required to file reports under Section 13
or Section 15(d) of the Securities Exchange Act of 1934. This definition applies even when an issuer is filing such reports voluntarily

Question 13

Ineligible Issuer

Answer 13

An ineligible issuer is one that’s not permitted to use a free writing prospectus.
Ineligible issuers include:

 An issuer that’s required to file reports under Section 13 or 15(d) of the Securities Exchange Act of
1934, but has not done so
 A blank-check company
 A shell company
 An issuer offering penny stock
 A limited partnership offering and selling its securities through methods other than a firm-commitment underwriting
An issuer that has filed for bankruptcy, or a filing was made against the issuer for insolvency in the
past three years. This provision will terminate if the issuer has filed an annual report or a registration
statement which includes audited financial statements.
 An issuer or an entity of an issuer convicted of a felony or misdemeanor that involves securities laws
violations or violations of antifraud provisions in the past three years
 An issuer that has been or is the subject of a refusal or stop order under the Securities Act of 1933,
Section 8 or 8A

Question 14

Shelf Registration

Answer 14

Rule 415 allows issuers to file registration documents and offer the subject securities on a delayed or continuous basis. The provisions of the rule are available for securities to be sold on behalf of the issuing company and for securities that are to be issued for such entities as employee benefit plans, securities to be issued upon conversion of other securities, and securities to be issued in connection with business combination transactions.

Question 15

“pay-as-you-go”

Answer 15

refers to a WKSI issuer filing a Form 3 ASR and then paying the registration
fee to the SEC as it sells securities off the shelf. Only a WKSI is permitted to file a Form S-3 ASR and utilize this type of procedure. All other issuers are required to pay the SEC registration fee when they file the appropriate form to raise capital.

Question 16

At-the-Market Offerings

Answer 16

An at-the-market offering of securities is sold at the prevailing market price
directly into the secondary market through a designated broker-dealer, rather than through a traditional offering of a fixed number of shares at a fixed price.Only issuers that register under Form S-3 or Form F-3 may engage in this type of offering.
A broker-dealer participating in the primary or secondary distribution of a security that’s not permitted to trade on a national securities exchange may not represent that the security is being offered at-the-market (i.e., priced based on the current secondary market value) unless the member firm has reasonable grounds to
believe that an independent market for the security exists.

Question 17

Free Writing Prospectus

Answer 17

A free writing prospectus (FWP) is any communication that doesn’t
meet the standards of a statutory prospectus.

Examples of free writing prospectuses include press releases, e-mails, preliminary or final term sheets, and marketing materials.

Question 18

Rule 134 – Communications Not Deemed a Prospectus

Answer 18

SEC Rule 134 permits the publication of a simple advertisement describing the basic features of a new issue. Advertisements that meet the conditions of this rule will not be considered a prospectus.

Question 19

Rule 135

Answer 19

According to SEC Rule 135, an issuer is permitted to publish a notice concerning an offering of securities that contains only limited information. These notices are not required to be filed with the SEC. However, the notice must have a legend which explains that it doesn’t contain an offer to sell securities.