What Is Registration?
Registration is the process by which a company files required documents with the Securities and Exchange Commission (SEC), detailing the particulars of a proposed public offering. A company issuing shares must reveal essential facts and detailed information about its business during the registration process, including a description of its business and assets, a description of the security being offered and the further details of the offering, a description and names of the company's management, and the company's financial statements, which have been certified by an accountant, working independently of the company.
A registration is also a process by which securities brokers or dealers become legally entitled to sell securities. To have the authority to sell securities, a broker or dealer must file forms, such as Form BD. This form requires disclosure of background information, including management policies, the names of executives and general partners, information about the company’s successors, and any current legal proceedings and/or previous securities violations. Form BD is covered under Section 15 of the Securities Exchange Act of 1934.
A broker or dealer must already be a member, or must become a member of a self-regulatory organization (SRO) such as the National Association of Securities Dealers (NASD). They must also register with the state or states in which they intend to sell securities (if such state laws require them to do so). Finally, the prospective broker and/or dealer must become a member of the Security Investor Protection Corporation (SIPC).
Companies must now file all required information electronically, so it can be accessible to the public more quickly. Companies must also file a prospectus, which provides a summary of the company's share offering, including the size, what the funds raised will be used for, and contact information for the company. A preliminary prospectus is the first offering document that a security issuer must issue. The final prospectus contains finalized information, including the exact number of shares/certificates issued and precise offering price, which are printed after the deal has been made effective.
Some securities are exempt from the SEC's registration process. These include limited and private offerings as well as municipal, state and federal, security offerings.
Not every person working for a securities dealer or broker or an investment bank must be registered in order to conduct business, but the requirements are very stringent, by necessity. If you are thinking about selling securities or working for an investment bank as a career, it is best to check with the relevant authorities in your jurisdiction to ensure that you have fully complied with all relevant laws governing the sale of securities.