What is the 'SEC Form S-1'

The Securities and Exchange Commission (SEC) Form S-1 is the initial registration form for new securities required by the SEC for public companies. Any security that meets the criteria must have an S-1 filing before shares can be listed on a national exchange. Form S-1 requires companies to provide information on the planned use of capital proceeds, detail the current business model and competition, and provide a brief prospectus of the planned security itself, offering price methodology and any dilution that will occur to other listed securities.

BREAKING DOWN 'SEC Form S-1'

Form S-1 is also known as the registration statement under the Securities Exchange Act of 1933. The SEC also requires the disclosure of any material business dealings between the company and its directors and outside counsel. Investors can view S-1 filings online to perform due diligence on new offerings prior to their issue.

The Filing

Part I, which is also called the prospectus, is a legal document. This section is required to have certain information, including the business operations, the use of proceeds, total proceeds and price per share, a description of management, financial condition, the amount being sold by individual holders, and information on the underwriters.

Part II is not legally required in the prospectus. This part includes recent sales of unregistered securities, exhibits and financial statement schedules.

The issuer will have liability if there are material misrepresentations or omissions.

Amending the Form

The form is sometimes amended as material information changes or general market conditions cause a delay in the offering. In this case, the issuer needs to file Form S-1/A. The Securities Exchange Act of 1933, often referred to as the truth in securities law, requires that these registration forms are filed to disclose important information upon registration of a company's securities. This helps the SEC achieve the objectives of this act: requiring investors to receive significant information regarding securities offered and prohibit fraud in the sale of the offered securities.

A less rigid registration form is the S-3, which is for companies that don't have the same ongoing reporting requirements.

Example

Shake Shack Inc. completed its initial public offering (IPO) in January 2015, pricing 5 million shares at $21. There was an initial S-1 form filed in December 2014, followed by a couple of S-1/A filings. The initial filing including a proposed maximum dollar amount the company intended on raising, the underwriters, use of proceeds, an explanation of the dual classes of stock. There is also information describing Shake Shack's business and the historical financial information.

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