Generally, under Section 5 of the Securities Act, an issuer must file a registration statement to offer securities to the public. Rule 415 of the Securities Act, however, provides “securities may be registered for an offering to be made on a continuous or delayed basis in the future,” i.e. it enables shelf offerings. Issuers file shelf offerings with Form S-3.
Form S-3 requires less disclosure than many other registration statements, but issuers must satisfy rigorous requirements to qualify to file a Form S-3. The issuer must have timely filed all its periodic reports. The issuer must have met all debt and dividend obligations in the prior 12 months. The issuer must additionally have a public float greater than $75 million.
Content of Form S-3
Form S-3 must contain all material information on the company, otherwise the issuer may be liable for securities fraud. A Form S-3 may incorporate by reference, making it generally less extensive than many other types of registration statements.
The primary SEC regulations governing what Form S-3 must contain are Regulation S-K and Regulation S-X. Regulation S-X governs the form and contents of financial statements in the registration statement, and Regulation S-K governs all other content.
The Form S-3 consists of two parts:
- Part I is the prospectus, excluding the cover page. It contains the core disclosures of Form S-1, giving an account of the issuer’s business operations and disclosing the issuer’s financials. The summary, risk factors section, management’s discussion and analysis (MD&A), and selected financial data are some of the most important disclosures in part I. The summary contains a brief description of the issuer’s business operations and often condensed tables of the issuer’s income statement, balance sheet, and pro forma financial information. The risk factors section discloses the main risks that the company faces. Issuers must also disclose audited financial statements such as income statements, balance sheets, and per share financial information. The MD&A section is a narrative account of the company’s financial performance by the management. These sections are much shorter than other registration statements, such as the Form S-1, because the issuer will often incorporate information from their periodic reports by reference.
- Part II contains supplemental information that the SEC does not require the issuer to disclose. This could include expenses the issuer incurred to conduct the offering, recent private placements of securities, and additional financial information.
[Last updated in January of 2022 by the Wex Definitions Team]