Registration (Securities) Definition
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.
A Little More on What is Securities Registration
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 litigations 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.
References for Registration
Academic Research on What is Registration
New SEC Rules 146 and 147: The Nonpublic and Intrastate Offering Exemptions from Registration for the Sale of Securities, Alberg, T. A., & Lybecker, M. E. (1974). Columbia Law Review, 74(4), 622-654. This article explains how the SEC attempted to clarify the nonpublic and intrastate offering exemptions by enacting rules 146 and 147. It discusses and compares the previous administrative and judicial standards with the new rules of the SEC interpreting the presence of the intrastate and nonpublic offering exemptions.
SEC Registration of Public Offerings Under the Securities Act of 1933, Barker, W. W. (1996). The Business Lawyer, 65-118. This paper provides a guide to the SEC registration and comment process for public offering since it was written from the view of an examiner of the SEC. It provides insight into the various problems that arise in registration statements as well as every stage of the registration process. This insight is useful to even the experienced securities counsel since most of these problems are recurring.
SEC Registration of Real Estate Interests: An Overview, Rifkind, R. G., & Borton, M. E. (1971). Bus. Law, 27, 649. This article states that for one to determine whether an offering of interests in real estate should be registered under the Securities Act of 1933, he should first understand if the securities being offered are securities. If confirmed, it should be determined whether an exemption from the Act’s registration requirements is available for the offering.
Exemptions from SEC Registration for Small Businesses, Thomforde Jr, F. H. (1979). Tenn. L. Rev., 47, 1. This paper majors on how the SEC has been granted authority by Congress to pass rules that would enable small businesses to raise capital easily. One such rule is the Regulation A which provides businesses with a streamlined and less costly method of raising capital as long as they disclose various aspects of the businesses and the securities being offered to the investing public.
Development of SEC Practices in Processing Registration Statements and Proxy Statements, Woodside, B. D. (1968). Bus. Law., 24, 375. This research explains how the procedural provisions of Section 8 of the Act failed as a means of disposing of the regular business with efficiency and dispatch. It further explains how this Section was seldom useful where consent was absent because of the short length of time within which notice hearing and order should occur.
SEC Registration of Private Investment Partnerships after Abrahamson v. Fleschner, Hacker, R. C., & Rotunda, R. D. (1978). Columbia Law Review, 78(7), 1471-1489. This article investigates hedging as a conservative position which combines buying long and selling short because the hedger is protected from serious loss even if the market of certain security rises or falls. It shows how small groups of investors usually have organized private investment partnerships that consist of hedging as their primary activity.
The new crowdfunding registration exemption: Good idea, bad execution, Cohn, S. R. (2012). Fla. L. Rev., 64, 1433. This study explains crowdfunding which is a way of raising capital through broad-based internet solicitation of donors. It also explains the exemption created by Congress regarding this crowdfunding. However, this exemption is fraught and has regulatory requirements that exceed even the current exemptions and raise transaction costs and liability concerns that can significantly decrease the exemption’s utility for small capital raising efforts.
Relief for Small Businesses: Two New Exemptions from SEC Registration, Thomforde Jr, F. H. (1980). Tenn. L. Rev., 48, 323.This paper examines how the SEC attempts to protect small businesses when raising capital through the introduction of various exemptions. One such exemption is Regulation A that provides a streamlined and less costly way of raising capital. Another one is the Regulation Crowdfunding which was enacted by Congress.
Shelf registration: competition and market flexibility, Kidwell, D. S., Marr, M. W., & Thompson, G. R. (1987). The Journal of Law and Economics, 30(1), 181-206. This article discusses shelf registration that was started as an experiment by the SEC and later permanently adopted. This rule expects companies to file a single registration statement for the total securities that they expect to issue over the next couple of years and then sell a portion of or all the securities if they so choose.
Shelf Registration: The Dilemma of the Securities and Exchange Commission, Hodes, S. (1963). Virginia Law Review, 1106-1149. Following the fundamental aim of federal securities regulation, section 6(a) was included in the Securities Act of 1933 by Congress and it states that only the securities presently intended to be offered for sale to the public may be registered for distribution. This research analyzes the commission’s action in these situations and indicates that it should focus more closely to its congressional mandate.
Shelf registration, integrated disclosure, and underwriter due diligence: an economic analysis, Fox, M. B. (1984). Shelf registration, integrated disclosure, and underwriter due diligence: an economic analysis. Virginia Law Review, 1005-1034. This paper investigates if modern finance theory demonstrates that the information improvement arising from due diligence produces no social benefit. It indicates that provided with a properly wide scope of the role of the market for securities in the economy, the opposite is experienced. The paper also examines the effects of short form and shelf registration and underwriter due diligence.