Investors are sometimes surprised to learn the SEC does not have information about all companies that offer and sell securities. When a company conducts a registered offering or an exempt offering under Regulation A or Regulation Crowdfunding, the company is required to file information about the company, including financial statements, and a description of the offering with the SEC.
If a company, however, conducts an offering that is exempt under a different section, rule or regulation, such as Regulation D or an intrastate offering exemption, although the company may be required to file a notice filing, it is not required to file a substantive disclosure document with the SEC. Investors should be aware that since reliable information about these companies may be scarce, fraudsters may be able to more easily spread false information about the company.
Registration and Filing Requirements
Many companies that sell their securities to the public register those securities under the Securities Act of 1933. These companies must file with the SEC and give investors a prospectus describing the company, including audited financial statements, and important facts about the offering. If a company does not register the offer and sale of its securities with the SEC, the offering must be conducted under an exemption from the registration requirements. Some of the most frequently asked questions about exemptions are contained in the table below together with the respective SEC filing requirements, if any.
SEC Filing Requirements
Notice on Form D.
Form C, including two years of financial statements that are certified, reviewed or audited, as required; progress and annual reports.
Tier 1: Form 1-A, including two years of financial statements; exit report.
Intrastate Offering Exemptions (Section 3(a)(11) and Rule 147 and 147A)
Employee Benefit Plans – Rule 701
To learn more about the SEC’s registration requirements and available exemptions, see our Small Business website.
If a company registers its securities under the Securities Act, the company must then file periodic reports with the SEC under the Securities Exchange Act of 1934. The obligation to file reports continues at least through the end of the fiscal year in which the registration statement became effective. After that, the company may suspend reporting if the number of its record shareholders fall below the following thresholds:
- 300 shareholders of record of the class of securities offered (1,200 shareholders of record if the company is a bank, bank holding company or savings and loan holding company); or
- 500 shareholders of record of the class of securities offered and less than $10 million in total assets for each of its last three fiscal years.
Even if a company doesn’t have to register its securities for an offering, it still may have to file reports with the SEC if the company lists its securities on an exchange or has more than $10 million in assets and a class of equity securities with either 2,000 or more record holders or 500 or more record holders that are not accredited investors.
If a company is not required to file information with the SEC, you may be able to get information about the company from these sources:
From the company. Ask the company for any available information. If the company is small and unknown to most people, you should call your state securities regulator to get information about the company, its management, and the brokers or promoters who've encouraged you to invest in the company. Visit the website of the North American Securities Administrators Association to get the name and phone number of your state securities regulator.
The Secretary of State where the company is incorporated. Contact the secretary of state where the company is incorporated to find out whether the company is a corporation in good standing. You may also be able to obtain copies of the company's incorporation papers and any annual reports it files with the state.
From your state securities regulator. Even if a company is not required to register its securities with the SEC, it may be required to register them with your state. You should contact your state securities regulator to find out whether they have information about a company and the people behind it. Your regulator will tell you whether the company has been legally cleared to sell securities in your state. Visit the website of the North American Securities Administrators Association to get the name and phone number of your state securities regulator.
From other government regulators. Many companies, such as banks, do not have to file reports with the SEC. But banks must file updated financial information with their banking regulators. To find this information, visit the websites of the Federal Reserve System's National Information Center of Banking Information, the Office of the Comptroller of the Currency, or the Federal Deposit Insurance Corporation.
From reference books and commercial databases. Visit the websites of your local public library or the nearest law or business school library. You'll find many reference materials containing information about companies. You can also access commercial databases for more information about the company's history, management, products or services, revenues, and credit ratings.
Investor Bulletin: Microcap Stock Basics (Part 1 of 3: General Information)
Investor Bulletin: Microcap Stock Basics (Part 2 of 3: Research)
Investor Bulletin: Microcap Stock Basics (Part 3 of 3: Risk)