Registering a Security:
The general rule is that all securities being offered for sale must first be registered with the Securities and Exchange Commission (SEC) and with the relevant agency of state government unless the transaction is exempt. Here is a brief summary of some of the requirements:
- Click here to go to a page on the SEC website which explains the registration process in detail.
- The issuer must submit to the SEC detailed information about the offering including audited financial statements
- The issuer must submit (and the SEC must approve) a "prospectus" that contains detailed information about the offering including a comprehensive disclosure of all the risks. After the offering has been registered the prospectus is the primary disclosure document that must be given to all prospective purchasers.
- After registration the company must submit periodic reports to the SEC.
Exemptions to the registration requirement may be available (depending on the nature of the security being offered and the kind of investor that is being sought)
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