Coordinated Registration Under State Securities Law - Explained
Registration by Coordination
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What types of coordinated registration are available under state laws?
There are two primary options for registration by coordination that ease the process of complying with state securities requirements. The first is Coordinated Review - Equity. The Second is Coordinate Review - Small Company Offering Registration.
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What is Coordinated Review - Equity?
This type of review is designed for use during an IPO that is seeking registration (not seeking a statutory or rule-based exemption from registration). It is generally not allowed for limited registrations under Regulation A. Under this program, the issuer files to register its securities in Pennsylvania. Pennsylvania Securities Commission (PSC) acts as an administrator and collects the required disclosure documents. The PSC will also choose another state that requires a merits review and solicit this state to review the offering. The issuer may then register this disclosure and merit review in any other state in which it seeks to sell securities. One state takes the lead on all disclosure concerns, while another assumes responsibility for any merit issues.
Note: This process is advantageous, as it allows the issuer to only deal with two states in the disclosure and review process. The alternative is to undergo disclosure and review requirements in every state of issuance.
Example: ABC Corp is undertaking an IPO. As part of the IPO process, ABC will be forced to register its securities in each state in which it is directly offering securities for sale. ABC seeks to undertake the coordinated review-equity process to circumvent the need to comply with the disclosure and review requirements of every state.
What is Coordinated Review - Small Company Offering Registration?
Most states permit the use of CR-SCOR for offerings under Rule 504 or Reg A, Tier 1. Under this program, registration only requires a simplified disclosure form. The issuer would be able to submit this form in lieu of going through the standard state disclosure or merit review requirements. Also, the SCOR system separates the US into five filing regions. Rather than filing a SCOR disclosure in each state where securities will be sold, the issuer can file in a region to cover all the states in that region.
Note: The issuer would have to file a disclosure in each region in which an issuance state is located.
Example: ABC Corp is undertaking a small offering issuance. It is seeking an exemption from federal registration under Rule 504. ABC will primarily offer securities for sale in Delaware, District of Columbia, Maryland, New Jersey, Pennsylvania, Virginia and West Virginia. All of these states are part of the Mid-Atlantic SCOR regions. As such, ABC may file the SCOR disclosure documents with each state rather than going through the state-mandated disclosure and review processes.
How do you feel about the coordinated-review programs available for IPOs and small offerings? What do you think is the state purpose behind allowing for these exemptions? Do you think these systems are effective in accomplishing those objectives? Why or why not?
ABC Corp is considering issuing securities pursuant to rule 504. It needs to raise approximately $1 million in funds to grow operations. ABC is concerned with having to comply with state disclosure and review requirements? What options may be available for ABC? Please describe any procedures necessary in this process.
- Securities Law (Intro)
- What are Securities Laws?
- What is a Security?
- What qualifies as an Investment contract?
- What are the primary federal securities laws?
- What are the regulatory goals of security laws?
- What is the Securities and Exchange Commission?
- What is an Initial Public Offering?
- What is a Direct Public Offering?
- What is Crowdfunding?
- Securities Act of 1933
- What is an Offer to Sell securities?
- Who are the parties regulated in an offer to sell securities?
- What are the primary disclosure documents required in an offer to sell securities?
- Forward Looking
- Red Herring Prospectus (Securities) Definition
- Registration of Securities
- What is an issuer allowed to do at each stage of the registration process?
- How are issuers classified for purposes of the registration and offering process?
- What is an issuer allowed to do during the Pre-filing Period?
- What are the limitations on the issuer during the Post-filing, Waiting Period?
- What is an issuer allowed to do during the Post-Effective Period?
- What is an Emerging-Growth Company?
- What type of information must an issuer disclose?
- What laws govern the mechanics of disclosure in a securities offering?
- Deficiency Letter (Securities Law)
- Registration Exemptions Securities Act of 1933
- What are Exempt Securities and Exempt Transactions?
- What are Restricted Securities?
- Section 3(a)?
- Section 3(b)?
- What is a Rule 147 Exemption?
- What is a Section 4(a) Exemption?
- Section 4(a)(5)?
- What is a Regulation A Exemption?
- What are Regulation D Exemptions?
- What is a Rule 504 Exemption?
- What is a Rule 505 Exemption?
- What is a Rule 506(b) Exemption?
- What is a Rule 506(c) Exemption?
- What is Rule 502(d) and the Rule 144 Safe Harbor?
- Rule 144a
- What are the disclosure requirements for companies employing an exemption?
- What is the requirement to file Form D?
- What is the effect of failing to register an offering under Section 5?
- Liability Under the Securities and Exchange Act of 1933
- What is civil liability under Section 11 of the 33 Act?
- What is civil liability under Section 12 of the 33 Act?
- What are defenses available to charges under Sections 11 and 12?
- What is civil liability under Section 17 of the 33 Act?
- What is potential criminal liability under the 33 Act?
- The Security Exchange Act of 1934
- When must an issuer register pursuant to the 34 Act?
- What disclosures are required of reporting companies under the 34 Act?
- What is liability under Section 10(b) and Rule 10(b)(5)?
- What is insider trading under Rule 10(b)(5)?
- What damages are available under Section 10 and Rule 10(b)(5)?
- What is insider trading under Section 14 of the 34 Act?
- What is liability under Section 16 of the 34 Act?
- What is liability under Section 18 of the 34 Act?
- What is criminal liability under the 34 Act?
- Liability under the Securities Enforcement Remedies Act?
- Blue Sky Laws State Securities Laws
- What are Blue Sky Laws?
- When is an issuer required to comply with state securities laws?
- What are the registration requirements under state law?
- What is Coordinated Registration under state law?