What Is SEC Form S-8?

SEC Form S-8 refers to a filing that allows public companies to register securities it offers as part of an employee benefit plan. Companies are required by the Securities and Exchange Commission (SEC) to register these securities before they are issued under the Securities Exchange Act of 1933. The SEC generally intends these filings to protect investors from fraud by providing them accurate and sufficient information while balancing the burden placed on issuing entities with regard to reporting.

Key Takeaways

  • Form S-8 refers to a filing that allows public companies to register securities it offers as part of an employee benefit plan.
  • The filing is required by the Securities and Exchange Commission under the Securities Exchange Act of 1933.
  • The form must be filed before a company issues of these securities.
  • Form S-8 cannot be used for issuances to consultants or advisors who promote a company's stock.

Understanding SEC Form S-8

SEC Form S-8 is a short-form registration statement that allows companies to issue shares to employees under certain circumstances such as an employee benefit plan. This is a requirement by the SEC, so investors get the information they need to properly consider the purchase of a new security. Regular filings like these also limit fraudulent practices, material misrepresentations, and other acts of deception.

Form S-8 is used when companies issue stock as part of an employee benefit plan including incentive plans, profit-sharing, bonuses, options, or similar opportunities. The SEC defines employee as anyone who serves the company in the capacity of an employee, general partner, director, consultant, trustee, or advisor. The term also extends to insurance agents who act exclusively in a business capacity for the company, as well as former employees and anyone related to deceased employees.

The form must be filed before a company issues of these securities. In some cases, the SEC requires less comprehensive documentation for companies that have simpler operating structures or for smaller, more targeted issuances of securities. The SEC exempts some offerings from its registration requirement, including small or private offerings, interstate offerings, and securities issued by municipal, state, or federal governments.

The SEC collects fees from companies that complete S-8 filings. Registration fees for Form S-8 are based on the stock value and the amount of shares issued under the plan.

Special Considerations

There are restrictions on how the form can be used. The SEC stipulates that Form S-8 cannot be used for securities issued to consultants and advisors in certain instances. In response to abuse of the form by companies in the past, the SEC stipulates that consultants and advisors who receive securities in connection with services that are meant to provide direct or indirect promotion of a firm’s stock do not qualify as participating in an employee benefit plan.

Form S-8 can't be used for issuances to anyone who markets or promotes the company's shares.

Here's a hypothetical example that was common among companies that misused the Form S-8 filing. Company X hires an individual as a consultant. This individual, though, doesn't provide the company with any consulting services, but does do promotional work to boost the company's share price. In exchange for this service, the company issues the individual stock and files a Form S-8. That person may end up selling the stock for a profit, with the proceeds being returned back to the issuing company.

Form S-8 vs. Form S-1

Abbreviated or streamlined forms such as Form S-8 arise from situations in which some investor information required by SEC Form S-1 would not be necessary for prospective investors to make an informed purchase decision.

Most new issuances require companies to file Form S-1 before a security may be listed on a public exchange. SEC Form S-1 includes a legal prospectus describing the issuance, in addition to details about recent sales of unregistered securities, financial statements, and other information pertinent to a prospective investor. This form must be filed before any company can list its shares on a national exchange.