Form S-3 Filing – Definition

Cite this article as:"Form S-3 Filing – Definition," in The Business Professor, updated April 7, 2020, last accessed August 11, 2020, https://thebusinessprofessor.com/lesson/form-s-3-filing-definition/.

Back To: BUSINESS TRANSACTIONS, ANTITRUST, & SECURITIES LAW

S-3 Filing

Form S-3 filing refers to a simplified exchange and securities form that is used to register companies, instead of using the usual form S-1. They use the form to register their securities as per the 1993 Securities Act. It is the simplest form for registering company securities. Companies must meet organizational and transactional requirements to qualify to use this form.

A Little More on What is an S-3 Filing

Companies use S-3 filing for the purpose of raising capital. When filing the S-3, the issuer is not required to give a lot of information as it is the case with the S-1 form. There are eligibility tests provided on the form for companies that wish to use the S-3 filing.

Registration Requirements

With S-3 registration, investors get the right to demand that a firm registers its securities using the S-3 form. For a company to be able to use the S-3 form,  it is mandatory that it meets the following requirements:

  • The organization of the company should be within the territory of the United States or the District of Columbia. Also, the company’s operations should also be within the United States or its territories.
  • The company should have its securities already registered as per the requirements of the Securities Exchange Act of 1934.
  • The company should have not less than $75 million in public float and should be limited to 1/3 of the market value in any given trailing 12-months period.
  • The company must have traded in not less than $1 billion in securities that cannot be converted into primary offerings for cash in the past three years.
  • The company should have met Section 12 or 15(d)’s requirements of the Exchange Act. It should also have filed all the required information as per Sections 13, 14, or 15(d) for not less than twelve calendar months right before filing the S-3 form.
  • The company, as well as its subsidiaries, should not have missed out on paying sinking fund installments or dividends on preferred stock. It should also not have defaulted on making any installment of the money it has borrowed or on long-term leases, since the last fiscal year’s close.
  • The company must have filed all previous paperwork right on time. It should also trade on the national exchange on a regular basis.

Transaction Requirements

  • It is worth noting that all securities are not filed using the S-3 form. So, for a company to be able to use S-3 form, the transaction should include one of the following types:
  • Both primary as well as primary offerings that have met the requirements of the registrants, and it is offered for cash by a firm.
  • Primary offerings of equity that is non-convertible instead of common stock
  • Secondary securities, which means that they are offered to an individual and not to the security’s issuer.
  • The company should have dealt with issuing dividends, warrants, rights offerings, stock options, conversions, and stock options that are selling for cash.

References for “S-3 Filing

https://www.investopedia.com/terms/s/s-3.asp

https://en.wikipedia.org/wiki/Form_S-3

https://financial-dictionary.thefreedictionary.com/S-3+Filing

www.legalandcompliance.com/tag/difference-between-form-s-1-and-form-s-3/

https://www.nasdaq.com/investing/glossary/f/form-s3

Was this article helpful?