A key goal of the treasurer of a public company is to have its securities registered, so that it can more easily sell the securities, and so that its investors can freely trade them. The registration process is very time consuming and expensive, so companies attempt to circumvent it through a variety of exemptions. Regulation A provides a reduced filing requirement for small-dollar issuances, while Regulation D allows for the complete absence of registration for security sales to accredited investors, though those investors cannot resell their securities without taking additional steps. If none of these simpler methods are available, then a company must use either the Form S-1 or S-3. Form S-3 is an abbreviated registration that is available only to seasoned public companies, while Form S-1 is the “full” version that the remaining public companies must use. This chapter describes the applicability of the various forms of registration and the exemptions from registration, as well as the accounting and systems related to equity transactions.
If a treasurer wants to sell stock to investors that in turn can be immediately traded by the investors, then it is necessary to file a registration statement with the Securities and Exchange Commission (SEC). Compiling a registration statement and walking it through the SEC review process is one of the most expensive and time-consuming tasks that a treasurer can engage in. It should be avoided if one ...