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SEC 2110 - Form S-1
Publication date: 30 Jun 2023
us PwC SEC Volume
.1 General
.11 What is Form S-1 and where can I find it?
Form S-1 is the basic SEC registration form used to register the offer and sale of securities under the Securities Act. It is generally used when a domestic company undertakes an initial public offering of its common stock (commonly referred to as an IPO). Form S-1 is also used by existing SEC registrants when they don’t meet the requirements for using another Securities Act registration form (e.g., Form S-3).
The disclosure requirements of Form S-1 are set forth under the various items within the body of the form and generally cross-reference to Regulation S-X and Regulation S-K for the specific requirements.
The text of Form S-1 is available on the SEC’s website (https://www.sec.gov/files/forms-1.pdf).
Other sources that issuers should consider when preparing a Form S-1 include the General Instructions to Form S-1 and Regulation C, which contains the general requirements for preparing and filing a registration statement under the Securities Act. Additionally, the SEC staff has published extensive interpretive guidance including various Compliance & Disclosure Interpretations and Industry Guides.
.12 Will the SEC staff review a Form S-1 on a non-public basis?
Yes, under certain circumstances. Section 6(e) of the Securities Act provides that certain registration statements prepared by Emerging Growth Companies (EGCs) (as defined in Securities Act Rule 405) may be submitted to the SEC for non-public review. Additionally, the SEC’s Division of Corporation Finance permits all issuers (i.e., not just EGCs) to submit certain registration statements for non-public review. Registration statements submitted for non-public review are referred to as draft registration statements.
The non-public review process is intended to facilitate the formation of capital by allowing companies to work through SEC comments before their registration statement is publicly available.
.121 What registration statements may be submitted on a draft basis for non-public SEC staff review?
Under Division of Corporation Finance policy, all issuers (including EGCs) may submit the following registration statements on a draft basis for non-public review:
- Draft registration statements (and related revisions) for IPOs and other initial registrations under the Securities Act;
- Draft registration statements (and related revisions) for the initial registration of a class of securities under Section 12(b) of the Exchange Act (see SEC 3110); and
- Draft registration statements (but not related revisions) submitted within 12 months after the effective date of one of the registration statements referred to above.
The SEC staff’s non-public review is conditioned on the issuer providing a cover letter with the nonpublic submission indicating that the draft registration statement (and related revisions, as applicable) will be made public prior to a road show or effectiveness (as appropriate) within the timeframes set forth by the Division of Corporation Finance. See Question 5 of the Frequently Asked Questions on Voluntary Submission of Draft Registration Statements available on the SEC website (https://www.sec.gov/corpfin/voluntary-submission-draft-registration-statements-faqs).
.122 Will draft registration statements and associated SEC staff comments and issuer responses remain non-public?
All draft registration statements and related amendments must be made publicly available before the offering is completed. SEC comment letters and issuer responses related to draft registration statements will also be made public according to the SEC staff’s existing policies. See Question 11 of the Frequently Asked Questions on Voluntary Submission of Draft Registration Statements available on the SEC website (https://www.sec.gov/corpfin/voluntary-submission-draft-registration-statements-faqs).
.123 Where can I find additional information relating to draft registration statements and non-public SEC staff review?
The announcement of the Division of Corporation Finance policy for non-public review can be found at http://www.sec.gov/corpfin/announcement/draft-registration-statement-processing-procedures-expanded.
The SEC staff has published FAQs on voluntary submission of draft registration statements available at http://www.sec.gov/corpfin/voluntary-submission-draft-registration-statements-faqs.
The SEC staff has published Securities Act Forms CDIs 101.04 and 101.05.
SEC 2170 contains a discussion of requirements applicable to EGCs.
.13 Does Form S-1 permit issuers to incorporate information by reference?
Yes, under certain circumstances. Form S-1 allows registrants that meet the requirements in General Instruction VII to provide the information required by Items 3 through 11 of Form S-1 through incorporation by reference of previously filed Exchange Act filings (e.g., Form 10-K and Form 10-Q). This mechanism is sometimes referred to as “backward incorporation” because the documents that are incorporated by reference have been previously filed. If the registrant elects to incorporate information by reference, Item 11A of Form S-1 requires the registrant to describe all material changes in the registrant's affairs that have occurred since the end of the latest fiscal year and have not been described in a Form 10-Q or Form 8-K filed under the Exchange Act.
Form S-1 also permits a smaller reporting company (SRC) to incorporate by reference documents filed by the registrant pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the effective date of the registration statement and prior to the termination of the offering. This mechanism is sometimes referred to as “forward incorporation” because the documents to be incorporated by reference will be filed in the future. For an SRC to be eligible to use forward incorporation, it must comply with the eligibility requirements for an issuer to use incorporation by reference as set forth in General Instruction VII and Item 12 of Form S-1 for documents filed before the effective date of the registration statement.
[Editor’s note: When a Form 10-K is incorporated by reference into a Form S-1, the SEC requires the financial statements to be current as of both the filing and effective dates of the registration statement. Therefore, separate financial statements may be required in a Form S-1 prospectus if the financial statements incorporated by reference do not reflect certain events subsequent to the date of those financial statements. SEC 2120.23 includes a discussion for the types of subsequent events that may require revised financial statements.]
See SEC 2110.901 for additional guidance.
.2 Financial statement requirements
.21 Where can I find the financial statements requirements applicable to Form S-1?
Item 11(e) of Form S-1 requires financial statements and financial statement schedules meeting the requirements of Regulation S-X as well as any financial information required by S-X 3-05 and S-X Article 11 (S-X 8-04 and S-X 8-05 for an SRC).
The periods to be covered in the issuer’s financial statements and the associated age of financial statements requirements are generally driven by S-X 3-01, 3-02, 3-04 and 3-12 (S-X 8-02 and 8-08 for an SRC). See SEC 4600 for additional information on the SEC’s age of financial statement requirements and SEC 2110.22 and .23 for a discussion of financial statements which may be omitted from a draft registration statement.
The required financial statements and related footnotes for a private company preparing a Form S-1 should be evaluated for compliance with relevant US GAAP requirements and accounting standards that apply specifically to public companies. Some standards which were not required to be applied as a private company may need to be applied in connection with preparing Form S-1. Additionally, transition provisions for some new accounting pronouncements can be different for a public business enterprise (PBE) and a non-PBE and may also depend upon EGC (SEC 2170) or SRC (SEC 2160) status. As such, the transition provisions related to new accounting standards can be a complex matter. See US In depth 2019-20.
In addition to consolidated financial statements of the issuer, Regulation S-X may require separate financial information in Form S-1 for one or more of the following situations:
- The registrant (parent company) pursuant to S-X 5-04(c), S-X 7-05(c), and S-X 12-04 (see SEC 4510);*
- Unconsolidated majority-owned subsidiaries pursuant to S-X 3-09 (see SEC 4520);*
- Fifty percent or less-owned persons accounted for by the equity method pursuant to S-X 3-09 (see SEC 4520);*
- Guarantors of registered securities pursuant to S-X 3-10 and S-X 13-01 (see SEC 4530);
- Affiliates whose securities collateralize an issue of registered debt pursuant to S-X 3-16 or S-X 13-02 (see SEC 4540); and
- Businesses acquired or to be acquired and real estate operations acquired or to be acquired pursuant to S-X 3-05 or S-X 3-14 (S-X 8-04 or S-X 8-06 for SRCs) (see SEC 4550, SEC 4555 and SAB Topic 1-J).
*Not required for SRCs.
[Editor's note: Special accommodations for EGCs which allow them to provide only two years of financial statements may apply to the separate financial information described above (see SEC FRM 10220.5).]
[Editor’s note: Companies contemplating an IPO and auditors should evaluate the specific independence matters related to performing an audit in accordance with SEC independence requirements.]
See SEC 2110.903, SEC 2110.904, SEC 2110.905, SEC 2110.906, SEC 2110.907, SEC 2110.908, SEC 2110.909, and SEC 2110.910 for additional guidance.
.22 Will the SEC staff permit a non-EGC to omit certain financial statements otherwise required by Regulation S-X from a draft registration statement?
Yes. Securities Act Forms CDI 101.05 clarifies that a non-EGC that is permitted to submit a draft registration statement for non-public review may omit from its draft registration statement interim and annual financial information that the non-EGC reasonably believes will not be required to be “presented separately” at the time the non-EGC files its registration statement publicly. A non-EGC may not omit any required financial information from its publicly filed registration statements.
For example, consider a calendar year-end issuer that is a non-EGC (and does not qualify as an SRC) that submits a draft registration statement in November 2023 and reasonably believes it will first publicly file its registration statement in April 2024 when annual financial information for 2023 will be required. The non-EGC may omit from its draft registration statements its 2020 annual financial information and interim financial information related to 2022 and 2023 because this information would not be required at the time of its first public filing in April 2024.
.23 May an EGC preparing an initial public offering of its equity securities omit certain financial statements otherwise required by Regulation S-X from a draft registration statement or from a publicly filed registration statement?
Yes. An EGC that is submitting a draft registration statement for confidential review may omit financial information for historical periods (including audited financial statements) otherwise required by Regulation S-X if it reasonably believes the omitted information will not be required to be “presented separately” at the time of the contemplated offering.
An EGC that is filing (i.e., publicly) a registration statement may omit annual and interim financial information that “relates to” an historical period that the company reasonably believes will not be required to be included at the time of the contemplated offering. For purposes of making this assessment, interim financial information that will be included in a longer historical period “relates to” that period. Accordingly, interim financial information that will be included in an historical period that the issuer reasonably believes will be required to be included at the time of the contemplated offering may not be omitted from its filed registration statements.
For example, consider a calendar year-end EGC that submits a draft registration statement for its equity IPO in November 2023 and reasonably believes it will commence its offering in April 2024 when annual financial information for 2023 and 2022 (but not 2021) will be required. The EGC may omit from its November 2023 draft registration statement its 2021 annual financial information and interim financial information related to 2022 and 2023 because the company expects that information will not be required to be “presented separately” at the time of the contemplated offering. If the EGC were to file (i.e., publicly) its registration statement in January 2024, it may omit its 2021 annual financial information, but it must include its 2022 and 2023 interim financial information in that January filing because that interim information “relates to” historical periods that will be included at the time of the public offering (i.e., the 2023 and 2022 interim financial information form a part of the 2023 and 2022 annual periods which will be included in the registration statement at the time of the contemplated offering). See Securities Act Forms CDI 101.04.
Before distributing a preliminary prospectus, an EGC must amend its registration statement to include all financial information required by Regulation S-X at the time of the amendment.
SEC 2170 contains additional guidance applicable to EGCs.
.4 Accountants’ consent
.41 Where can I find information relating to the SEC’s requirements for accountants’ consents?
See SEC 2400 for a discussion of accountants’ consents.
.5 Experts language
.51 Where can I find information relating to experts language?
See SEC 2300 for a discussion of experts language.
.9 Frequently asked questions
.901 Is a registrant required to file its Form 10-K for its most recently completed fiscal year before using incorporation by reference in connection with a Form S-1 even if that Form 10-K is not yet due and the Form S-1 is not required to include financial statements for the most recently completed fiscal year?
Yes. Condition C under General Instruction VII of Form S-1 requires that the registrant has filed an annual report for the most recently completed fiscal year. We understand that the SEC staff interprets this requirement to mean that the registrant must have filed its Form 10-K for the most recently completed fiscal year even if the Form S-1 is filed before the Form 10-K is due or before the Form S-1 would otherwise be required to include audited financial statements for the most recently completed fiscal year. For instance, if a calendar year-end registrant files a Form S-1 on January 17, 2023, it would be required to file its Form 10-K for the year ended December 31, 2022 before filing the Form S-1 in order to use the incorporation by reference method of providing information to investors in that Form S-1.
.902 Is a registrant required to provide the S-K 402 executive compensation disclosures for its most recently completed fiscal year in Form S-1 even if the registrant is not required to include audited financial statements for that recently completed fiscal year?
Generally, yes. See Regulation S-K CDI 217.11.
.903 Does S-X 3-06 permit a company preparing a Form S-1 in connection with its initial public offering of common stock to provide its audited financial statements for a nine-month period in lieu of its financial statements for a full a fiscal year even if there is no change in fiscal year-end?
No. S-X 3-06 only applies in connection with an issuer’s change in fiscal year-end (S-X 3-06(a)) or financial statements required by S-X 3-05 (S-X 3-06(b)). If a company believes that it should be permitted to provide its audited financial statements for a nine-month period in lieu of its financial statements for a full fiscal year in other circumstances, then it should seek relief from the SEC staff as described in S-X 3-13. Relief from the SEC staff should be obtained prior to confidentially submitting the initial registration statement.
.904 Is a registrant required to provide additional disclosures and pro forma information when the offering proceeds may or will be used to finance an acquisition?
Reference should be made to S-K 504 (Instruction 6) if Form S-1 is used to raise funds that may or will be used to finance an acquisition of a business.
SEC 4550 and SEC 4560 contain a discussion of the requirements under S-X 3-05 and S-X Article 11 to include historical financial statements and pro forma financial information for the business to be acquired.
.905 Is a registrant required to provide pro forma earnings per share or pro forma financial information when the offering proceeds are used to retire debt or preferred stock?
In a registration statement, the SEC staff has indicated that disclosures of pro forma earnings per share (EPS) are important to investors when the proceeds will be used to extinguish preferred stock or debt and such extinguishments will have a material effect on EPS. See S-X 11-01(a)(8).
[Editor’s note: The weighted average number of shares outstanding during the period must be adjusted to give effect to the number of shares issued or to be issued to extinguish the preferred stock or debt, or if applicable whose proceeds will be used to extinguish the preferred stock or debt as if the shares were outstanding as of the beginning of the period presented. See S-X 11-02(a)(9)(ii).]
.906 Is a registrant required to provide pro forma financial information when distributions at or prior to closing of an IPO are expected?
SAB Topic 1-B.3 and SEC FRM 3420 provide guidance on situations that would require the inclusion of an unaudited pro forma balance sheet reflecting a planned distribution to owners alongside the latest balance sheet included in the filing. SAB Topic 1-B.3 and SEC FRM 3420 were issued prior to the SEC’s 2020 updates to S-X 11-02. S-X 11-02(a)(12)(i) states that a registrant must not present pro forma financial information on the face of the registrant’s historical financial statements or in the accompanying notes, except where such presentation is required by US GAAP. Accordingly, companies may wish to discuss their presentations with the SEC staff.
.907 Is a registrant required to provide pro forma financial information when there is a change in capitalization at or prior to closing?
Oftentimes in an IPO, changes in capitalization will occur upon the effective date of the registration statement or completion (i.e., closing) of the IPO. Historical financial statements should not be revised to reflect modifications of the terms of outstanding securities that become effective after the latest balance sheet. For example, the conversion of securities on either the effective date of the registration statement or closing date of the IPO should not be reflected in the historical balance sheet. The security should be classified according to its nature in the historical balance sheet.
SEC FRM 3430.2 states that “If terms of outstanding equity securities will change subsequent to the date of the latest balance sheet and the new terms result in a material reduction of permanent equity or, if redemption of a material amount of equity securities will occur in conjunction with the offering, the filing should include a pro forma balance sheet (excluding effects of offering proceeds) presented alongside of the historical balance sheet giving effect to the change in capitalization.”
The guidance in SEC FRM 3430.2 was issued prior to the SEC’s 2020 updates to S-X 11-02. S-X 11-02(a)(12)(i) states that a registrant must not present pro forma financial information on the face of the registrant’s historical financial statements or in the accompanying notes, except where such presentation is required by US GAAP. Accordingly, companies may wish to discuss their presentations with the SEC staff.
.908 Is incorporating by reference or cross-referencing to information outside of the financial statements permitted in financial statements?
Generally, no. Disclosure in the text of the prospectus does not eliminate the need for similar disclosure, when required by US GAAP or International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS as issued by the IASB), in the notes to the financial statements. In any financial statements, incorporating by reference or cross-referencing to information outside of the financial statements is not permitted unless otherwise specifically permitted or required by SEC rules, US GAAP or IFRS as issued by the IASB.
The non-financial statement portions of the Form S-1 may contain cross-references to the financial statements.
See General Instruction VII of Form S-1 and Securities Act Rule 411(a).
.909 Is a private company preparing an IPO registration statement required to apply the “dual approach” to quantifying financial statement errors if it had not done so previously?
Yes. A private company's initial registration statement must apply the "dual approach" of quantifying errors under SAB 108 (SAB Topic 1-N) to the financial statements that are included in the registration statement. If applying the "dual approach" indicates that there is a material misstatement in any of the financial statements included in the registration statement, then those financial statements need to be corrected (i.e., may not use the cumulative effect method of initially applying SAB 108). However, the initial application of SAB 108 should be treated similar to a change in accounting principle rather than the correction of an error for purposes of disclosure.
.910 Does Form S-1 specifically require disclosure of a selected financial data table?
No. In SEC Release No. 33-10890, Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information, the SEC eliminated the requirement for Selected Financial Data which was previously set forth in S-K 301.
Notwithstanding the elimination of the specific line-item requirement, some issuers voluntarily provide such information. As a general matter, that information is not required to be audited, nor is there a requirement for the information to be preceded by any introductory language. Although selected financial data is not required to be audited, issuers sometimes include introductory or “headnote” language preceding the information. The introductory language might indicate that the source of annual financial data is audited financial statements or, it might refer by name to the independent registered public accounting firm that audited the underlying annual financial statements. If the auditor is named, the SEC staff has historically required the registrant to provide an auditor’s consent to the reference in the headnote to the selected financial data when that disclosure is included or incorporated by reference in a registration statement under the Securities Act (see SEC 2400.28).
If interim data is referred to as having been derived from unaudited financial statements, registrants generally also include the statement referred to in S-X 3-03(d).
If the auditor is named and its report on the source financial statements was based, in part, on the report of another auditor, reference to the other auditor is generally made. If the auditor is named and its report on the source financial statements contains an explanatory paragraph for matters other than consistency, the headnote language generally states that fact, indicating the nature of the explanatory paragraph.
If the amounts presented for any of the years included in any selected financial data have been revised, either as a result of the correction of an error, or due to the retrospective application of other matters (e.g., changes in accounting, presentation of discontinued operations, etc.) and full financial statements for those periods have not been reissued, together with an audit report, then the headnote does not describe the amounts for those periods as being derived from audited financial statements.
.911 Do the requirements of S-K 302(a) apply to a Form S-1?
Sometimes. S-K 302(a)(2) provides that S-K 302(a) is not applicable until after a company’s initial registration under Sections 12(b) or 12(g) of the Exchange Act. In most IPOs, the company filing the Form S-1 does not have securities registered under Sections 12(b) or 12(g) of the Exchange Act. Accordingly, the requirements of S-K 302(a) generally are not applicable in connection with most Form S-1s filed in connection with an IPO.
However, in connection with most IPOs, the company also registers its securities under Section 12(b) of the Exchange Act (usually on Form 8-A) (see SEC 3120). If the company prepares a Form S-1 after it has registered securities under Section 12(b) or 12(g) of the Exchange Act (e.g., in connection with a subsequent "follow-on" offering), the company must consider the requirements of S-K 302(a) and, where applicable, provide the required disclosures unless the company is otherwise exempt from the scope of S-K 302(a). See S-K 302(a)(2) and (3) for specified entities which are exempt from the scope of S-K 302(a) (e.g., foreign private issuers and SRCs).
See SEC FRM 1620.1.
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