What Is an S-3 Filing?

An S-3 filing is a simplified process companies undergo to register securities through the Securities and Exchange Commission (SEC). This filing is normally done in order to raise capital, usually after an initial public offering (IPO). The S-3 filing can only be used by companies that meet specific, timely regulatory filing requirements.

Key Takeaways

  • An S-3 filing is a simplified process companies undergo to register securities through the Securities and Exchange Commission.
  • This filing is normally done in order to raise capital, usually after an initial public offering.
  • Companies must meet a certain set of criteria before they can go through the S-3 fling process.
  • There may be a period of time between the filing and a review by the SEC.

Understanding S-3 Filings

When a company wants to raise capital by making a public offering, it registers the securities by undergoing an S-3 filing. The S-3 form must be filed immediately if the goal is to make an offering in the near-term. Securities registered using the S-3 form is only for U.S.-based companies a year after they complete their IPOs.

A company that wants to file an S-3 form must meet certain criteria in order to go through the S-3 filing process before having a secondary offering. Some of these include:

  • Company registration and operations must be within the United States
  • The company must already have securities registered with the SEC
  • At least $75 million in shares must be owned by public investors in a public float
  • The company must have traded non-convertible securities worth at least $1 billion
  • Dividend payments must be kept up to date
  • Regular paperwork and other filings must be up to date
  • Shares must be traded on a national exchange

After a company makes an S-3 filing, there may be a gap period where the SEC reviews the form before it is put into effect. This timeframe may be shortened to 10 days and under for well-known seasoned issuers. Shelf registrations for well-known seasoned issuers might not trigger an SEC review.

Most S-3 filings are reviewed by the SEC—those submitted by certain well-known seasoned issuers may not trigger a review.

Components of S-3 Filing

The S-3 filing has two parts. The first part includes the cover page, a list of the risk factors, and a prospectus that future investors will be able to access. The second part consists of a series of filings and disclosures posted and made available to the public through the SEC's EDGAR system.

Special Considerations

If a company does not meet the requirements listed above, it may qualify by being a wholly-owned subsidiary of a well-known seasoned issuer. Well-known seasoned issuers that submit S-3 filings can benefit from certain expedited handling procedures by the SEC. For example, S-3 shelf registrations by well-known seasoned issuers can become effective automatically when they are filed.

A company must also meet certain criteria to be designated as a well-known seasoned issuer. It is possible for a company to lose its well-known seasoned issuer status after filing a registration statement. The company may be able to use the existing registration statement for its offering until filing its 10-K annual report.

A company may also proceed with a shelf registration for an S-3 filing if it intends to raise funding at a later date. A shelf registration of this type usually gives the company up to three years to offer the securities. It is possible for a company to make multiple offerings through a single S-3 shelf registration statement.

S-3 Filing vs S-1 Filing

Compared with an S-1 filing, an S-3 filing does not require the issuer to provide as much extensive information when completing an S-3 form. The S-1 form filing, on the other hand, is used as the initial registration for new securities issued by public companies in the United States. The filing must be completed before shares can be traded on a national exchange. Most companies file the S-1 form ahead of their IPO.

When a company completes the S-1 filing, it must disclose several key details about the company including how it intends to use the capital raised, its business model, along with a prospectus about the security.

The S-1 form is filed through the SEC's EDGAR system, and is, like the S-3 filing, meant only for companies based in the United States.