Regulation S-K - Explained
What is Regulation S-K?
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Table of ContentsWhat is Regulation S-K?What are the Requirements of Regulation S-K?Regulation S-K applies to the following areas:Academic Research on Regulation S-K
What is Regulation S-K?
Regulation S-K outlines the disclosure requirements for different SEC filings by public companies. These requirements include registration statements, periodic reports, proxy statement, and other filings.
The US Securities Act of 1933 and Securities Exchange Act of 1934 makes certain reporting requirement mandatory for the companies who sell their securities on a public exchange. These regulations are in place to protect the investors from any fraudulent activities.
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What are the Requirements of Regulation S-K?
Generally, companies need to register their securities with the U.S. Securities and Exchange Commission (SEC) in order to sell it to the public. These public companies are obligated to disclose certain information prescribed under Regulation S-K. They are required to file Form S-1 as the registration statement this is the first time the Regulation S-K applies to a company. After that, they need to fulfill the ongoing filing requirements using forms 10-K and 8-K.
This regulation helps the investors to make informed decisions while investing in a company. The issuers need to report the basic business and financial information with respect to the specific securities offering through Form S-1 prior to its initial public offering. This online form contains 8 pages that cover all the necessary points.
Regulation S-K applies to the following areas:
- Registration statements under the Securities Act of 1933.
- Registration statements under section 12 of the Securities Exchange Act of 1934.
- Annual and other ongoing reports.
- Transaction statements of going private.
- Statements of offering a tender.
- Annual reports to security holders, and proxy and information statements.
- Any other documents prescribed to be filed under the Securities Exchange Act of 1934.
Some of the information that is required to be disclosed under Regulation S-K
- Details of Business
- Incorporation and the address.
- The performance of the company in its different industry segment with a detailed description of the current business.
- Plans for running the business in the future.
- Details of Property
- Description of physical property including land, plants, oil and gas reserves, mines and others.
- Legal Proceedings
- Any legal proceedings that are pending in a court of law, except the ordinary routine litigation incidental to the business.
- Any such proceedings where the issuer or any of its subsidiaries is a party need to be reported.
- If any of its properties is subject to such litigation, that also must be reported.
- Details of the Securities
- Description of different share classes and any provisions that may affect them. Such as poison pill and other provisions described by law or by the charter of the issuer.
- The market price of the common equity and related stockholder matters.
- Dividends of the common equity, dividend history and whether the dividend will be paid or not.
- A performance graph that describes the change in the cumulative total shareholder return on a class of common stock.
- These figures need to be compared with at least one peer issuer chosen in good faith.
- Financial Data
- Financial data includes operating revenues, total assets, long term obligations and redeemable preferred stock, income and cash dividends declared per common shares.
- These data need to be presented in comparative columnar form mentioning each of these for the last five fiscal years. The companies may need to include financial data of additional fiscal years so that the data truthfully reflect their financial performance.
- Companies may include other financial information if that is necessary for a clear understanding.
- Analysis of the financial condition and results of operations. This analysis must be done by the management and it should meaningfully reflect the real condition.
- Any occasion of disagreements between the company and its auditors and accountants must be reported.
- Detail reporting on market risk. This report should cover both qualitative as well as quantitative aspects.
- Report on the controls and procedures.
- Statement on the company's internal control over financial reporting.
- Executive compensation details.
- Details about who is running the company and what financial stake they have in it.
- Details about executive officers, promoters and control persons.
- Information about the major shareholders.
- The company's code of ethics. If it doesn't have a code of ethics, then it is needed to be mentioned with the explanation. The company's website (if there is any) must also include the information on its code of ethics.
- Details about the corporate governance of the business.
- Registration Statement with prospectus
- A printed or online prospectus must be compiled in easy to understand English.
- It must include all the basic information and must agree with the information furnished in Form S-1.
Apart from the above-mentioned information, the companies are required to furnish some other details that cover environmental liabilities and others. The process of filing is often costly and time-consuming.
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