Form S-3

A simplified U.S. Securities and Exchange Commission registration for securities available to companies that have met prior reporting requirements (e.g., companies that have met all reporting requirements listed under sections 12 or 15(d) of the SEA of 1934). This simplified form is easier and quicker to file than a traditional Form S-1.

Interestingly, once S-3 registration requirements are complete and one year has passed after a company’s initial public offering, investors may demand that an eligible company uses the Form S-3 to register its shares. However, a company must have a minimum of $75 million in public float and must have traded a minimum of $1 billion in non-convertible securities for cash (not for exchange) over the past three years (among other requirements) so newer and smaller corporations are not generally eligible to use a Form S-3.

In order to be registered using a Form S-3, a security must fall into one of four transaction classifications. First, primary offerings of non-convertible equity (not counting common stock) may qualify. Second, both primary and secondary offerings for cash that meet the requirements of a qualifying registrant may qualify. Third, the following offerings may qualify: warrants, stock options sold for cash, rights offerings, conversions and dividend or interest reinvestment plans. Fourth, secondary securities may qualify as well.

For numerous reasons that are, quite frankly, nerdy and boring, investors love Form S-3 submissions. However, companies benefit from keeping their Form S-3 filings to two or three annually at most. This is partially because numerous legal and accounting expenses arise when a Form S-3 filing is prepared. As a result, investors must generally negotiate with companies fairly regularly about how often these submissions will be filed. When a Form S-3 is filed with the SEC, it features a prospectus that (in-part) summarizes important information about the security offering itself.



Husband: “Well, I’m off to play golf with Charlie. I need to twist his arm in order to get the company to file a Form S-3 this quarter.”

Spouse: “Ummm… have fun?”