There are two primary sets of federal laws that come into play when a company wants to offer and sell its securities to the public. They are:
The Securities Act of 1933 (Securities Act)
The Securities Act generally requires companies to give investors "full disclosure" of all "material facts," the facts investors would find important in making an investment decision. This Act also requires companies to file a registration statement with the SEC that includes information for investors. The SEC does not evaluate the merits of offerings, or determine if the securities offered are "good" investments. The SEC staff reviews registration statements and declares them "effective" if companies satisfy our disclosure rules.
The Securities Exchange Act of 1934 (Exchange Act).
The Exchange Act requires publicly held companies to disclose information continually about their business operations, financial conditions, and managements. These companies, and in many cases their officers, directors and significant shareholders, must file periodic reports or other disclosure documents with the SEC. In some cases, the company must deliver the information directly to investors.
Your company's securities offering may qualify for one of several exemptions from the registration requirements.
If you decide on a registered public offering, the Securities Act requires your company to file a registration statement with the SEC before the company can offer its securities for sale. You cannot actually sell the securities covered by the registration statement until the SEC staff declares it "effective," even though registration statements become public immediately upon filing.
Your company can become "public" in one of two ways - by issuing securities in an offering registered under the Securities Act or by registering the company's outstanding securities under Exchange Act requirements. Both types of registration trigger ongoing reporting obligations for your company. In some cases, the Exchange Act also subjects your company's officers, directors and significant shareholders to reporting requirements.
The federal government and state governments each have their own securities laws and regulations. If your company is selling securities, it must comply with federal and state securities laws. If a particular offering is exempt under the federal securities laws, that does not necessarily mean that it is exempt from any of the state laws.
More Information
You can call the SEC's Small Business Ombudsman and Office of Small Business directly at 202-942-2950 to assist you with any questions you may have regarding federal securities laws. You can also write to:
Small Business Ombudsman
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Mail Stop 3-4
Washington, D.C. 20549
For copies of SEC forms and recent SEC releases:
Publications Section
U.S. Securities and Exchange Commission
450 Fifth Street N.W.
Washington, D.C. 20549-0019
Telephone: (202)942-4046
E-mail addresses:
e-prospectus@sec.gov
help@sec.gov
Information courtesy of the Securities and Exchange Commission.
