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Form S-1 Filing

Understand the Purpose of the Form S-1 SEC Filing

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Form S-1 Filing

In This Article
  • What information is contained within a Form S-1 document?
  • Why does the SEC require Form S-1 filings?
  • What are some of the main sections of a Form S-1?
  • Where can Form S-1 filings be found?

Form S-1 Filing Definition

The S-1 is a required SEC filing for all companies seeking to become officially registered and listed on a public stock exchange.

Under SEC’s Securities Act of 1933, the Form S-1 and regulatory approval are necessary for companies to “go public” and issue shares in the open market.

Companies can decide to become publicly traded in order to:

  • Raise New Outside Capital (and/or)
  • As a Liquidity Event for Existing Shareholders

Form S-1

First Page of Registration Statement (Source: SEC.gov)

The two available methods to going public – i.e. the events that precede an S-1 filing – are an:

In either case, an S-1 must be submitted and approved by the SEC.

Upon reviewing the S-1 of a company, investors can make an informed decision on whether to participate – as well as develop an educated opinion on the company.

The purpose of the registration statement is to give investors more transparency into a newly-public company, which helps protect them from fraud and misleading claims.

Furthermore, companies that intentionally leave out all required information (or material risks) can face litigation.

Once the SEC approves a company’s S-1 filing, the company is then listed on public exchanges such as:

  • New York Stock Exchange (NYSE)
  • NASDAQ
Finding S-1 Filings

S-1 filings can be found on the SEC EDGAR website. In addition, any amendments or changes to previous filings are filed separately under SEC Form S-1/A.

Foreign companies listing on a U.S. exchange are also required to register with the SEC but with the SEC Form F-1.

Form S-1 Filing Requirements

The first mandatory section of an S-1 is called the “prospectus,” which is the most detailed part of the document consisting of the following information:

Key Sections
Summary Information
  • Overview of Company History, Mission Statement, Business Model, Competition, and Strategy
Financial Statements
  • Company’s Financial Performance To Date and Results of Operations
Risk Factors
  • Material Events Posing a Threat to the Company/Industry and the Mitigating Factors
Use of Proceeds
  • Plans for the Allocation of the Newly Raised Capital
Determination of Offering Price
  • Methodology Used to Arrive at the Offering Share Price (if IPO)
Dilution
  • Commentary on Current Capitalization & Share Class Structure

Form S-1 vs Preliminary Prospectus (“Red Herring”)

The preliminary prospectus (i.e. red herring) document is filed with the SEC confidentially and also provides potential investors with information regarding an upcoming IPO.

However, the document is kept confidential between a limited number of parties (e.g. SEC, M&A advisors, prospective institutional investors) as the IPO details are not yet finalized at the time.

The red herring typically accompanies the bankers on the roadshow to help gauge interest among investors by describing the issuance of equity and the proposed details of the IPO offering.

For instance, Reddit recently filed a confidential S-1 draft with the SEC to initiate the process of going public.

Reddit S-1Reddit Files Confidential S-1 with SEC (Source: The Verge

In comparison to the red herring, the S-1 is a lengthier and more formal document regarding the issuer and the IPO.

The red herring is a preliminary prospectus that comes before the S-1 and is circulated during the initial “quiet period” before the registration has become official with the SEC.

The SEC often requests additional material to be added or changes to be made to the red herring.

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