Composition of SEC Form S-3
1. Consists of Two Parts: In essence, Form S-3 consists of two components. A cover page, risk considerations, and a prospectus comprise the first part, which will eventually be made available to all prospective investors. Exhibits, undertakings, and other disclosures are included in Part 2 but are not normally sent to investors; instead, they are made public via the SEC’s Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system.
2. Content of Prospectus: The prospectus is made up mainly of a summary section that provides all the important details regarding the security offering, such as the type of asset, whether it is an overallotment option, the exchange (if any) on which it will be listed, and the intended use of the proceeds. Businesses that are very young or unknown are inclined to disclose their business plan, competitive advantages, and frequently even the most basic financial data about their organization.
3. Pricing Terms: Pricing terms are not included in the prospectus until the final copy, which is the version sent to investors together with underwriters’ sales confirmations.
4. Disclosures of Risk Factors: Subsections pertaining to risks related to the offering itself and risks related to the issuing firm often comprise the disclosure of risk factors. The most recent Form 10-K or Form 10-Q filed by the issuing firm contains the majority of the risk factors.
5. Other Information: Depending on the kind of issuing corporation and the security being offered, other parts of the S-3 form that must be included include the plan of distribution, comprehensive descriptions of the securities being registered, and disclosure of the ratio of earnings to fixed charges.
6. Disclosure on Issuers: The expertise of the issuer’s accountants and attorneys, who provide validation of the securities up for sale, is often also included in the S-3 form.
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