What is an S-1 Filing?
The S-1 Filing is a mandatory registration form that companies must submit to the Securities and Exchange Commission (SEC) prior to being listed on a public exchange (e.g. NYSE, NASDAQ).
- What information is contained within an S-1 document?
- Why does the SEC require S-1 filings?
- What are some of the main sections of an S-1?
- Where can S-1 filings be found?
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.
Companies can decide to become publicly traded in order to:
- Raise New Outside Capital (and/or)
- As a Liquidity Event for Existing Shareholders
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:
- Initial Public Offering (IPO)
- Direct Listing
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)
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.
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:
|Use of Proceeds||
|Determination of Offering Price||
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 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.