Form S-8

An U.S. Securities and Exchange Commission filing used by publicly traded companies to register securities offered to its employees and consultants through benefit or incentive plans. This is a short-form registration statement that is effective upon filing. As a result, it may only be used in limited circumstances. Form S-8 filings may not be used by shell corporations.

Interestingly, this is a form that is particularly subject to abuses and has ultimately become the subject of numerous SEC enforcement actions in recent years. As a result of such abuses, the SEC amended the original S-8 filing requirements in order to prohibit their use by stock issuers and stock promoters in certain ways. Specifically, the amendments were designed to curb the practice of granting large (and ultimately illegal) distributions of securities to so-called “consultants” who would then immediately turn around and sell them to the public. When this occurred, the profits of these sales were then returned to the issuer. The issuer would then either keep the profits of the sale and/or use them to compensate stock promoters. Sometimes, gaming the system in certain ways is completely legal. But sometimes, gaming the system is a giant no-no. The SEC grew so tired of this particular profit-based “game” that it outlawed the practice and began strictly enforcing proper management of Form S-8 distributions. As a result, it you ever need to file a Form S-8 petition, take great care when doing so.

In order to be considered a legal Form S-8 share recipient, an individual must be a natural person who provides bona fide services to the company issuing the share. The services provided to that company cannot directly or indirectly maintain or promote markets for the company’s securities and the services provided must be outlined in a written agreement. S-8 share recipients also may not work in shareholder communication services, merger transactions, capital raising, serve in certain writing capacities or disseminate information related to the company’s securities. S-8 shares may not be used to repay loans or pay the issuing company’s bills.

 

EXAMPLE:

Executive: “I’ve decided that the benefits packages for the new hires will now include tiered levels of securities compensation, various kinds of insurance, paid family leave and a puppy of each individual’s choosing.”

HR Representative: “I’ll get working with the team to make sure that the Form S-8s are filed and that we develop a relationship with the Humane Society… but what if we want to hire cat people, not dog people?

Executive: “PUPPIES ARE NOT OPTIONAL.”