Registration Statement

The registration statement is a document filed with the Securities and Exchange Commission (SEC ) by the issuer to provide information to investors. The document consists of two parts. The first part is the prospectus, and the second part carries mandated additional information.

Filing is done when a company publically offers securities. This is mandated under the Securities Act of 1933 under Section 5(a). It is practiced to provide investors with the information needed for them to understand the company. The prospectus reveals critical information, and the second part is additional information that need not be revealed to investors but to the SEC.

The registration statement is a document containing necessary disclosures regarding the issue of securities filed with the SEC in the U.S. Form S-1 is the form used most to file for registration of securities offerings. The forms are, however, not to be used for securities issued by political subdivisions, foreign governments, or asset-backed securities. The information provided serves as a basis for decisions to be made by the investors. This is because the document is a revelation with regard to a company's vision, mission, operations, financial condition, and management.  Hence, it ensures transparency and prevents misinterpretation or fraud.

The registration statement includes the description of its products, services, operations, and audited financial statements. It contains details about the offerings, such as the type of securities offered, the amount, the number and how they were funded, and the risks involved, if any. The document will also contain information on the management, board, or shareholders, including the directors, executive officers, and members. It shall also reveal any ongoing legal issues that may affect the company.

It is required to be filed using the SEC's EDGAR or Electronic Data Gathering, Analysis, and Retrieval system as soon as the company decides to go public. Once it files the statement with the SEC, they have to undergo a waiting period. The SEC uses this period to review the document and check if it meets regulatory standards by providing proper disclosure. It is important to note that the company is not authorized to sell its securities to the public during the review period.  However, after proper review and necessary amendments are made, they shall initiate the offering.

Components of a registration statement with the SEC, irrespective of the type of registration statement, are given as follows:

1. Additional information: The supplementary information that is not asked in the first part is recorded here. Individual forms may ask for varied information based on the level of scrutiny according to the purpose of registration.
2. Summary: A summary of what the business does, details on its operations, financial situation, and ratio of earnings are all recorded here.
3. Offering price: The details of the security pricing, such as the rate, the numbers, and the breakdown, will be provided under this. The company's plan of distribution is also asked.
4. Securities: The reason for fundraising, the breakdown of offered securities, details of the issuer's outstanding securities, dividends yielded, etc, are also required to be provided.
5. Selling security holders: The form requires details of the plan of selling security holders if the registration process is for a secondary offering.  These are holders who cannot freely sell the stocks they hold in the open market.

Other components include dilution details, the details of underwriters or other experts who will receive a portion of the offered security, the risk factors involved in the use of proceeds, etc.

Some types of registration statement forms are given below.

Form-1

Form s-1 registration statement is the most used for IPO (initial public offer) registration. The information required for filling includes front and back cover pages of the prospectus, summary information, risk factors, ratio earnings to fixed charges, use of proceeds, offer price determination, plan distribution, dilution, and selling holder details. It also requires a description of registered securities, registrant information, named expert, and counsel interest information. In the second part of Form s-1 registration statement, information on recent sales of unregistered securities, distribution and issuance expenses, financial statement schedules, etc., are provided.

Form-3

These forms are used for dividend and interest reinvestment plans. It deals with information such as the use of proceeds, determination of offering price, selling security holders, plan of distribution, and description of securities to be registered, among other things.

Form-4

These forms are used in mergers that do not require the solicitation of consent or votes from all holders. Exchange offer of the issuer with another entity, public reoffering or resale of securities, etc. This form requires information on terms of transactions, pro forma financial information, and disclosure of the commission's position on indemnification for the liabilities under the Securities Act, among other things.

Form-8

This form deals with the registration of employee benefit plans for the company's employees or its subsidiary's employees. The information required includes general plan information, the securities to be offered, details of employees participating, resale restrictions, etc.

Let us look into a few examples to understand the statement of registration better.

Example #1

Let's imagine the case of ABC Limited. ABC Ltd. is a cloth manufacturing company and has grown significantly in the past few years. The company feels it is time to expand its operations and decides to opt for an IPO. ABC Ltd has drafted a statement of registration in Form 1 to the SEC. In the document, ABC Ltd has provided details with regards to its business, the securities it plans to sell, the determination of price and its breakdown, the details of technology it uses, the audited financial statements, details of critical personals, potential risks the investors has to bear, etc. the information will be submitted as a prospectus in part one and additional information in part two. After receiving the details in the required format, the SEC approves the IPO, after which ABC Ltd can proceed with the process.

Example #2

Trump Media & Technology Group filed an amended registration statement on Form S-1 with the U.S. Securities and Exchange Commission to register certain shares of common stock and warrants for resale or initial issuance following the company's business combination with Digital World Acquisition Corp. on March 25, 2024. The amended statement, which updates the registration filed on April 15, 2024, keeps the number of shares unchanged and incorporates re-audited financial statements for 2022 and 2023 by Semple, Marchal & Cooper LLP. TMTG CEO Devin Nunes expressed gratitude to SMC for their auditing services. 

The statement includes securities held by existing security holders, and TMTG will not receive proceeds from the sale or resale of these securities except from possible future warrant exercises. Not all registered securities may be sold immediately, as certain holders, including President Donald J. Trump, are subject to lockup periods. The registration has been filed but has yet to be effective, and securities can only be sold once it is. The amended registration statement and preliminary prospectus can be accessed on the SEC's website, and the prospectus will be available from Broadridge Financial Solutions upon effectiveness. This release does not constitute an offer to sell or solicit an offer to buy these securities in any jurisdiction where such actions would be unlawful. 

The differences between both the concepts are given as follows:

• The registration statement is a document that has to be filed with the SEC to proceed with IPOs.The prospectus is a document that is provided to interested investors who are approaching a company for investment.
• The purpose of the statement is to lay down the information required for the investors to understand the company and for the SEC to verify that the disclosure is done rightfully. The prospectus acts as a marketing tool to attract investors.
• The statement for registration contains the prospectus of the company and specific additional details required by the law.  The details declared are only partially accessible to potential investors, i.e., the additional information that is not part of the prospectus is not revealed. The prospects provide a detailed summary of the business, operations, securities offered, etc, and are accessible to potential investors.