SEC Form SB-2

SEC Form SB-2

Investopedia / Madelyn Goodnight

What Was SEC Form SB-2?

The term SEC Form SB-2 was a regulatory filing that was required by the Securities and Exchange Commission (SEC) for small businesses with revenues and public market floats of less than $25 million. The form was used to register securities to be sold for cash. Small businesses were required to file small business disclosure and reporting forms with the SEC.

The reporting process for SEC Form SB-2, along with other related forms, was eliminated and replaced by the SEC in 2008.

Key Takeaways

  • SEC Form SB-2 was required by the Securities and Exchange Commission for small businesses with revenues and public market floats of less than $25 million.
  • The form was also called the Registration Statement for Securities to be Sold to the Public by Certain Small Business Issuers to register securities to be sold for cash.
  • Form SB-2 was phased out in 2008, with small companies required to use the same forms as their larger counterparts.

Understanding SEC Form SB-2

The Securities Act of 1933 was enacted in response to the stock market crash of 1929. Also referred to as the truth in securities law, it was created as a way to help protect investors by guaranteeing that the financial statements of listed companies were more transparent and to set laws to prevent fraud in the securities markets.

Under the law, corporations are expected to file registration, regular statements, disclosures, and amendments to the SEC. Certain entities are exempt including those with offerings that are private or limited in size, as well as any securities offered by different levels of government.

Private offerings, offerings limited in size, and securities offered by different levels of government are exempt from reporting.

Small businesses that met certain thresholds were also required to file public disclosures such as Form SB-2: Registration Statement for Securities to be Sold to the Public by Certain Small Business Issuers. As mentioned above, this form was required by any small business with revenues and a public market float of less than $25 million.

A company's public market float is the portion of its shares that are available for purchase by the public, rather than those that are closely held by insiders—company executives, their families, board members, and/or other employees—or other entities.

The purpose of the form was to register any securities that up for sale for cash. Information found on the form included:

  • The name and address of the small business as listed on its charter
  • The jurisdiction of incorporation
  • Names and contact information of principal executives
  • Selling stockholder information
  • Number of shares
  • Offering price and terms
  • How the proceeds would be used
  • Associated risk factors

Special Considerations

The SEC adopted a new system of disclosure rules for smaller companies that are required to file periodic reports and registration statements with the agency. This new system eliminated the need for small business forms. The effective date of these changes was February 4, 2008.

Smaller reporting companies—as they're referred to by the SEC—are now required to file the same forms as other corporations. The main difference is that the information provided by these companies may be slightly different than their larger counterparts. Scaled disclosure requirements are noted in special sections on these forms.

The SEC has made changes to the qualifications of smaller reporting companies. As of July 2018, the definition allows any company with a public float of less than $250 million to provide scaled disclosures. This also applies to companies with revenues of less than $100 million annually and no public float or one that is less than $700 million.

Article Sources
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  1. U.S. Securities and Exchange Commission. "Changeover to the SEC’s New Smaller Reporting Company System by Small Business Issuers and Non-Accelerated Filer Companies. A Small Entity Compliance Guide." Accessed Mar. 8, 2021.

  2. U.S. Securities and Exchange Commission. "Registration Under the Securities Act of 1933." Accessed Mar. 8, 2021.

  3. U.S. Securities and Exchange Commission. "Smaller Reporting Companies."

  4. U.S. Securities and Exchange Commission. "Smaller Reporting Companies." Accessed Mar. 8, 2021.

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