SEC Form 424A

What Is SEC Form 424A?

SEC Form 424A is a prospectus form that a company must file with the Securities and Exchange Commission (SEC) if it has made significant changes to a previously-filed prospectus submitted as part of its registration statement.

Form 424A offers significant amendments to a company's original S-1 or S-2 filings beyond merely filling in any blanks left on the S-1. A company must provide five copies of each prospectus form prior to the effective registration date of the change.

Understanding SEC Form 424A

A prospectus is a printed legal document that companies publish prior to selling a security. The form provides financial information about the company and the securities it is making available for sale, including details regarding investment objectives, risks, and fees.

Prospectuses are important disclosure documents that give potential buyers and investors important information about the financial security of a company. Their contents typically include details of the company's business, biographies of its directors and officers, their compensation, financial statements, any pending litigation involving the company, and any other relevant material information, including a listing of the company's material property holdings. Prospectuses may also contain information about a company's stocks, bonds, mutual funds, and other investment holdings.

Initial filings are made with forms S-1 and S-2, and the 424A prospectus is used to amend these initial filings. According to the SEC:

(a) Except as provided in paragraph (f) of this section, five copies of every form of prospectus sent or given to any person prior to the effective date of the registration statement which varies from the form or forms of prospectus included in the registration statement as filed pursuant to § 230.402(a) of this chapter shall be filed as a part of the registration statement not later than the date such form of prospectus is first sent or given to any person: Provided, however, That only a form of prospectus that contains substantive changes from or additions to a prospectus previously filed with the Commission as part of a registration statement need be filed pursuant to this paragraph (a).

The aforementioned paragraph f stipulates that these rules do not apply to prospectuses of an investment company registered under the Investment Company Act of 1940, other than a registered closed-end investment company. Similar documents to SEC Form 424A include SEC Form 424B1, which covers new information not included in previous filings, and SEC Form 424B3, which is used to reveal substantive facts or events that arose after the previous filing without altering the prospectus in original form.

Special Considerations

In the United States, any company that wishes to offer securities for sale must file a prospectus with the SEC. The SEC must then declare this registration statement effective in order for the securities issuer to use it to finalize sales of its offerings.

An underwriter will usually help to prepare the prospectuses and may serve as their issuing manager, distributing the prospectus to shareholders and interested investors. Since 1996, the SEC has required that prospectuses be filed in SGML-coded format for easy uploading to the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) database, where they are made available to the public online.

The EDGAR database, and similar databases used in other nations, allow for the widespread distribution of prospectuses and other SEC filing documents.