What Is SEC Form 18?

SEC Form 18 is a filing with the Securities and Exchange Commission (SEC) that foreign governments and their subdivisions must submit to issue a new security for sale in the United States. It is more commonly known as the Application for Registration of Foreign Governments and Political Subdivisions. The standard information required from a foreign issuer on SEC Form 18 includes the branch of the government issuing the security, the type of security, and the amount to be issued.

Key Takeaways

  • SEC Form 18 is a filing with the SEC that foreign governments and their subdivisions must submit to issue a new security for sale in the United States.
  • It can be useful to investors trying to research a foreign security that is available in U.S. investment markets.
  • SEC Form 18 has instructions, definitions, and exhibits sections that set the requirements for registrants.

Understanding SEC Form 18

SEC Form 18 is used by foreign governments wishing to issue a new security for sale in the United States. It can be useful to investors trying to research a foreign security that is available in U.S. investment markets. By analyzing SEC Form 18, an investor can gain a better understanding of which department of a foreign government is issuing the security. They can also find key details for that security, such as the maturity date, interest, and the size of the issue.

Requirements of SEC Form 18

SEC Form 18 begins with some basic information that all prospective registrants must provide. This information includes the registrant's name, the title of the issue or issues, and the securities to be registered. Registrants must also disclose the amount to be registered and the names of exchanges where they applied for registration. Then, it lists some general instructions, such as that all applications must be typed or printed in English on 8.5 by 11-inch paper.

Definitions on SEC Form 18

The definitions section of SEC Form 18 contains 12 points that go into more detail on some of the form's requirements while simply repeating others.

  1. SEC Form 18 requires the registrant's name.
  2. If the registrant is a subdivision of a national government rather than a government, it must disclose which government it is subordinate to and describe its relationship to that government.
  3. Registrants must give the titles and designations of the issues, along with their interest rates and dates of maturity. They must also disclose which currency or currencies will be used to pay off the issue. There should be a brief outline of amortization, redemption, retirement, and sinking fund provisions. Furthermore, they must reveal information about any liens on properties and revenues. SEC Form 18 also requires an outline of what happens if the security is not serviced, as well as a brief statement of the circumstances related to failures to pay principal, interest, or other installments. If a national government guarantees the security, they must state which government and outline the guarantee's terms.
  4. SEC Form 18 requires the closing date of the registrant's last fiscal year.
  5. The registrant must disclose its total internally and externally funded debt as of the close of the last fiscal year.
  6. Registrants need to give the titles, amounts outstanding, and currencies payable of every issue of funded debt as of the close of the last fiscal year.
  7. The registrant must estimate its total internal and external floating debt in the appropriate currencies at the close of its last fiscal year.
  8. SEC Form 18 requires a properly classified statement of receipts during the last fiscal year.
  9. If there are any exchange controls in its country, the registrant must describe them.
  10. The registrant needs to disclose note issues, gold reserves, and gold stocks held by the central bank.
  11. SEC Form 18 requires a statement on the nation's merchandise imports and exports.
  12. Finally, the registrant must provide the country's international balance of payments for the last fiscal year.

Points 10, 11, and 12 only apply to national governments, not their subdivisions.

Exhibits Required in SEC Form 18

SEC Form 18 also requires three exhibits:

  1. Exhibit "A" must include the agreement that defines the rights of security holders. An English translation of the agreement is also required along with the original agreement if it is not in English.
  2. Exhibit "B" is the most recent annual budget of the registrant, and it does not require a translation.
  3. Exhibit "C" requires copies of any laws, decrees, or administrative rulings about what happens if the security is not serviced. Exhibit "C" also needs English translations if the original documents are not in English.