Registration (Securities) - Explained
What is the Registration of a Securities Offering?
Written by J. Mance Gordon
Updated at April 20th, 2024
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What is Registration of a Security Offering?
In the U.S. the companies need to register (file a registration statement) with the Security and Exchange Commission (SEC) prior to a public offering. During this process, they need to provide the details about the proposed offering as well as detailed information about the company.
Required information includes, details about the company's management, business, and assets. It must also provide detailed information on the securities being offered and the company's financial statements. The financial statements need to be approved and certified by an independent accountant. Registration is also required under applicable state law.
How does Securities Registration Work?
The security brokers and dealers also need to register themselves in order to trade the securities legally. They must file forms, like Form BD for being recognized as a legal broker of securities. In the form, they must provide information about their background and management policies. They also must disclose information about the management personnel and the company's successors. They also must declare all the pending litigation or any violation of security law on their part in the past.
Section 15 of the Securities Exchange Act of 1934 makes it mandatory for all the security dealers to file Form BD. A security dealer or broker also needs to be a member of a self-regulatory organization such as the National Association of Securities Dealers. They also must take a membership of the Security Investor Protection Corporation. They need to fulfill the registration obligations of the state where they intend to operate.
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