Last week the SEC released its final rules for the registration of securities on Form S-3 and F-3 registration statements. The amendments will allow a larger number of public companies to take advantage of the flexible requirements of Form S-3 and F-3 when registering securities for sale.
Form S-3 is the “short form” used to register securities offerings under the Securities Act of 1933, and Form F-3 is the equivalent form used by foreign private issuers. Perhaps the greatest benefit of Form S-3 is that it allows companies to rely on filings under the Securities Act of 1934 to satisfy the form’s disclosure requirements. Previously, a company could not take advantage of Form S-3 unless its public float (non-affiliate equity market capitalization) was at least $75 million; however, the amendments eliminate the public float requirement if other requirements are met, including having a class of securities listed on a national exchange and not selling more than the equivalent of one-third of the company’s public float in any 12-month period.
Like almost all SEC rules, the goal of Forms S-3 and F-3 is to strike a balance between investor protection and the ease with which issuers can bring their securities to market. In relaxing the requirements of Form S-3 and F-3, the SEC has evidently decided that the benefits of Form S-3 and F-3 can be expanded to a larger number of public companies without sacrificing investor protection.