- Annual Report
What Is an Annual Report?
An annual report is a company publication provided annually to shareholders detailing a company's operations and fiscal performance over the past year.
Most publicly held companies are required by law to distribute annual reports to shareholders. Annual reporting protects investors and keeps the public informed of company activities. These reports are usually audited, so companies must ensure they’re accurate and distributed in a timely manner.
Annual reports may vary in appearance, ranging from long-form company narratives with slick graphics to basic financial data tables provided by mutual funds. To meet regulatory requirements, annual reports include mandatory accounting disclosures and specific corporate information describing company operations. Most company annual reports also include a letter to the shareholders, financial highlights and summary data, analysis from senior management, product plans, research and development updates and the auditor's report.
Publicly held companies in the US are typically obliged to submit annual reports on Form 10-K to the SEC, though they may choose to distribute a separate annual report to shareholders. Companies may also file their annual reports with the SEC electronically in the EDGAR database system.
What Is an ANOC?
ANOC is an acronym for Annual Notice of Change, a document that healthcare providers are required by US regulations to provide to their members detailing changes to coverage effective on January 1 of the upcoming year. The aim of the ANOC is to provide healthcare subscribers with accurate, updated information and adequate time to assess their healthcare options.
Under current US regulations, healthcare providers in the US are required to clearly outline any changes in coverage, costs or service area in the ANOC document, which must meet exacting specifications and be delivered to members in September.
US healthcare communications are highly regulated, so data collection, formatting and delivery requirements are subject to change. Healthcare providers are expected to be aware of these changes and meet all current, relevant ANOC compliance requirements.
- Content Management System
Content Management System (CMS)
A Content Management System or CMS is used to manage the workflow of media (e.g. documents, files, video, etc.) in a collaborative environment.
- Continuous Disclosure
What Is Continuous Disclosure?
In Canada, many public companies are required to disclose specific information about their business and financial status on a regular basis. Amendments are currently being implemented to ensure more consistent application of disclosure requirements and other securities legislation across Canadian provinces and exchanges.
Canada's National Instrument 51-102: Continuous Disclosure Obligations outlines requirements for disclosure documents, including financial statements, proxies, information circulars, material change reports, management's discussion and analysis (MD&A), annual information forms (AIFs) and business acquisition reports (BARs).
Public companies and mutual funds are required to provide data that meets current Canadian standards for accounting practices and auditing standards, as described in National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency.
For companies other than investment funds, continuous disclosures must be certified in accordance with National Instrument 52-109Certification of Disclosure in Issuers' Annual and Interim Filings.
Continuous disclosure information is submitted via SEDAR (System for Electronic Document Analysis and Retrieval), Canada's electronic filing system for disclosures.
Foreign issuers are exempt from some continuous disclosure requirements, as described in National Instrument 71-102, Continuous Disclosure and Other Exemptions Relating to Foreign Issuers.
- SEC Form D
What Is SEC Form D?
SEC Form D, also known as Reg Dex or Reg D, is required for companies and funds offering and selling securities without registration under the Securities Act of 1933 in reliance on an exemption provided in Regulation D or Section 4(a)(5). The form must be filed within 15 days after the first sale of securities.
SEC Form D comprises brief information about the company, its executive officers and stock promoters, the amount and value of the securities sold and the date of first sale. The form is intended to prevent fraud in the sale of the offered securities by requiring significant information on those securities be made easily accessible to investors.
A number of SEC Form D filings are made by startups raising capital through venture capital and angel investors as well as certain pooled investment funds.
Form D is filed in XML format and must be filed using the SEC’s EDGAR (Electronic Data Gathering, Analysis and Retrieval) system. Once the Form D submission has been accepted, it can be accessed by the general public via SEC.gov.
- SEC Submission DEFM14A
What is SEC Submission DEFM14A?
Form DEFM14A must be filed with the Securities and Exchange Commission (SEC) prior to a merger or acquisition that will require a shareholder vote. Under The Securities Exchange Act of 1934, the form is meant to uphold shareholders' rights by providing them with enough information to enable them to vote at a security holders' meeting or via a proxy vote that they authorize.
Also known as the “definitive statement relating to merger or acquisition,” each filed DEFM14A is displayed publicly online using the SEC's EDGAR (Electronic Data Gathering, Analysis and Retrieval) system.
The filing includes: date, time and place of the meeting of security holders; revocability of proxy; dissenter's right of appraisal; individuals making the solicitation; direct or indirect interest of certain persons; modification or exchange of securities; financing information and financial statements; risk factors; voting procedures; acquisition or disposition of property; amendment of charter, bylaws, or other documents; and other key details.
- Dodd Frank Act
What Is The Dodd-Frank Act?
The Dodd-Frank Act of 2010, also known as the Dodd-Frank Wall Street Reform and Consumer Protection Act, comprises 2,000 pages of federal rules and regulations for financial institutions and their customers. Named after its Democratic sponsors, US Senator Christopher J. Dodd and US Representative Barney Frank, Dodd-Frank was passed in July of 2010 as a means of preventing the events that triggered the 2008 financial crisis from happening again.
The largest financial regulation revamp of its kind since the Great Depression, Dodd-Frank led to the creation of a number of new government bodies, including a Consumer Financial Protection Bureau (CFPB) to protect retail customers from predatory mortgage lending and reduce incentives for mortgage brokers to get home buyers to take on more costly loans. The CFPB now requires loan terms to be communicated in an easy-to-understand, simplified format.
Dodd-Frank has also spawned the Financial Stability Oversight Council, charged with keeping an eye out for potential threats to the financial system. It also created the Orderly Liquidation Authority, which was set up to facilitate the liquidation or restructuring of a large financial company that’s close to failing and thereby preventing a far-reaching economic collapse.
The Dodd-Frank Act also makes it mandatory for companies active in the oil, gas and minerals industries, that file forms annual reports with the Security and Exchange Commission (SEC), to report all payments made to governments on Form SD.
What Is EDGAR?
EDGAR (Electronic Data Gathering, Analysis and Retrieval) is the Security and Exchange Commission’s automated, online database where corporate regulatory filings are submitted and displayed. The system collects, validates, indexes, accepts and forwards regulatory submissions, also enabling the public at large to search and view filings freely on the web or via FTP.
The SEC implemented EDGAR in order to improve efficiency and transparency around corporate filings. All publicly traded companies use EDGAR to submit required, time-sensitive documents to the SEC.
Documents that must be filed via EDGAR include annual and quarterly statements, tender offers, information regarding institutional investors’ holdings, Schedule 13D and other key filings, many of which are the most important to investors and analysts. Except in the case of investment companies, actual annual reports to shareholders don’t need to be submitted on EDGAR, although some companies do so voluntarily.
Certain filers must submit various official EDGAR filings in Interactive Data format, using the eXtensible Business Reporting Language (XBRL).
EDGAR was phased into use over a three-year period ending May 6, 1996. Consequently, filings from that date and earlier may not be included in the system due to a hardship exemption made for hardcopy paper filings.
What Is an EOC?
EOC is an acronym for Evidence of Coverage, a document that details plan coverage, a member’s rights and responsibilities as well as the associated costs each year. Healthcare providers are required by US regulations to provide the EOC, also referred to as a certificate of coverage, to each and every member. The aim of the EOC is to provide healthcare subscribers with accurate information and adequate time to assess their healthcare options before the new year of coverage begins in January.
Under current US regulations, healthcare providers in the US are required to clearly outline coverage, including limitations and exclusions of that coverage, and associated costs to members in the EOC document, which must meet exacting specifications and be delivered to members in September.
US healthcare communications are highly regulated, so data collection, formatting and delivery requirements are subject to change. Healthcare providers are expected to be aware of these changes and meet all current, relevant EOC compliance requirements.
- European Single Electronic Format (ESEF) Mandate?
The ESEF mandate requires beginning January 1, 2020, all issuers on regulated markets within the EU and European Economic Area must submit annual financial reports (AFR) in the European Single Electronic Format. To be more specific, you’ll need to prepare your AFR in xHTML (a type of digital formatting) and, in case of IFRS consolidated financial statements, include Inline XBRL (tags for the primary financial statements.
Toppan Merrill consults for companies to comply with this mandate using our end-to-end ESEF Mandate solution.
Meeting the Mandated Requirements
There are two main steps for issuers to move from traditional PDF format to iXBRL:
The need to create the 2020 AFR in xHTML format (or convert the report from HTML or InDesign files into xHTML).
The need to add iXBRL tags where necessary.
There is no phase-in by company size or sector. Starting with the financial statements for annual periods beginning on or after January 1, 2020, the mandate applies to all issuers within the EU.
Annual financial reports (AFRs) in xHTML format and iXBRL-tagged IFRS consolidated financial statements are due four months after year-end. In practice, this means you won’t be submitting your first ESEF filing until early 2021.
The ESEF mandate is the end result of a cascade of actions that started with the European parliament’s goal to create a “single digital market” by “moving from individual national markets to one single EU-wide rulebook.” This led to the 2013 EU Transparency Directive changes, which essentially gave ESMA the task of defining a single digital financial reporting format. ESMA followed the clear global trend (following similar mandates by the U.S. SEC and South African CIPS), adopting XBRL tagging and iXBRL format as the basis of the ESEF.
- European Standards Market Authority (ESMA)
The European Securities and Markets Authority (ESMA) was formed in January 2011, and is a European Union financial regulatory agency and European Supervisory Authority, located in Paris.
ESMA works in the field of securities legislation and regulation to improve the functioning of financial markets in Europe, strengthening investor protection and co-operation between national competent authorities.
The idea behind ESMA is to establish an "EU-wide financial markets watchdog".
- eXtensible HyperText Markup Language (xHTML)
Over the past few decades, companies have moved toward increasingly stylised annual reports — often available via the web, using HTML (HyperText Markup Language, essentially the most common language of web pages). xHTML (eXtensible HyperText Markup Language) takes HTML and adds a layer of machine-readable metadata.
- Form 10K
What Is Form 10?
Form 10 is used to register securities with the Securities and Exchange Commission (SEC) for trade on US exchanges. Also known as the General Form for Registration of Securities, it provides essential information including the type and amount of security being issued, the issuer’s financial information, and potential opportunities and conflicts of interest. Once filed, a Form 10 is made publicly available on the SEC’s online filing system, EDGAR (Electronic Data Gathering, Analysis and Retrieval).
Used by both private and public companies, SEC Form 10 can be filed voluntarily, with no revenues, assets or minimum shareholder requirements. However, the form is required of security issuers with more than US$10 million in total assets and 750 or more shareholders on record. It fulfills disclosure requirements from The Securities Exchange Act of 1934, but can also be used for accelerated and small business filings.
Form 10 is a fundamental source of information about publicly traded security—everyone from private investors to financial analysts uses this form to make investment decisions.
- Form 10Q
What Is Form 10-Q?
Form 10-Q is a performance report that public companies are required to file with the Securities and Exchange Commission (SEC) on a quarterly basis for the first three quarters of the fiscal year. In accordance with The Securities Exchange Act of 1934, it provides investors with an ongoing, comprehensive view of a company’s financial position during the year, including unaudited financial statements.
Form 10-Q offers similar information to the annual Form 10-K—filed after the fourth fiscal quarter—but is normally unaudited and in less detail. Each quarterly report generally compares the prior quarter to the current one, and the same quarter last year to the current one.
A company’s Form 10-Q must be provided to any shareholder upon request, though 10-Qs are usually made available on the website of larger companies in the Investor Relations or similarly termed section. All Form 10-Qs filed with the SEC are also publicly available on the SEC’s online EDGAR (Electronic Data Gathering, Analysis and Retrieval) system.
- Form 20F
What Is Form 20-F?
Form 20-F is the primary disclosure document required of foreign private issuers listing equity shares on exchanges in the United States. It’s most often filed with the Securities and Exchange Commission (SEC) as an annual report, but is also used to register classes of securities. Companies with fewer than 50% of its voting shares held by US investors can file this form.
Under both the Securities Act and the Exchange Act, Form 20-F is meant to help standardize reporting requirements so investors can evaluate foreign-based companies’ equities alongside US-based companies’ equities. Accordingly, Form 20-F disclosures are very similar to those required of US issuers, reporting information such as key operational details, market risks, corporate governance and financial statements.
However, there are two main differences. First, if a foreign private issuer prepares financial statements in accordance with home-country accounting standards or not to IASB (International Accounting Standards Board) IFRS (International Accounting Standards Board International Financial Reporting Standards), it must also furnish reconciliation with US GAAP (Generally Accepted Accounting Principles). Second, foreign private issuers are allowed to disclose executive compensation in aggregate and don’t have to provide a Compensation Discussion & Analysis.
Form 20-F is filed and displayed publicly on the SEC’s EDGAR (Electronic Data Gathering, Analysis and Retrieval) system.
- Form 40F
What Is Form 40-F?
Also called the Registration and Annual Report for Canadian Securities Form, Form 40-F is a filing with the US Securities and Exchange Commission (SEC) used by Canadian companies that want to offer their securities to United States investors.
In addition to being used to register Canadian securities in the United States, Form 40-F provides investors with valuable insight into the Canadian companies offering them. After the first filing with the SEC, the form is thereafter used by Canadian companies to provide their annual report. The form not only supplies standard information about the security and the company, it also gives the domestic and Canadian contact information for the securities issuer.
Form 40-F may be used by a company that’s incorporated or organized in Canada, is a foreign private issuer or crown corporation, has been subject to reporting to any Canadian regulatory authority for at least 12 months, and possesses outstanding equity shares valued at US$75 million or more, or a Form F-9 filed with the SEC on or before Dec. 30, 2012.
Once filed, Form 40-F is accessible to public scrutiny on the SEC’s online system, EDGAR (Electronic Data Gathering, Analysis and Retrieval).
- Form 6K
What Is Form 6-K?
Form 6-K is submitted by certain foreign private issuers to the US Securities and Exchange Commission to keep investors aware of information the issuers distribute outside of the United States.
The only SEC submission required of foreign issuers outside of annual reports, this Exchange Act form aims to ensure cross-border transparency of information and investor protection. Form 6-K is used to report any material information that a foreign issuer makes public in its home country, files publicly with its home country stock exchange, or distributes to its security holders.
From 6-K also serves as a means of reporting any other significant information arising between annual reports and often includes copies of the foreign issuer’s latest financial reports, like income statements, cash-flow statements and balance sheets.
Foreign issuers submit Form 6-K to the SEC electronically. It’s displayed publicly using the SEC’s EDGAR (Electronic Data Gathering, Analysis and Retrieval) system. A record that shows “6-K/A” is an amended Form 6-K, submitted when material information has changed.
- Form 8K
What Is Form 8-K?
Whenever a US public company experiences any event of importance to shareholders or the SEC, whether a major material event or significant corporate change, Form 8-K must be filed with the Securities and Exchange Commission (SEC) within four business days. The form gives the name and description of the events and includes relevant exhibits, like press releases, financial statements and data tables. It serves as an update to Form 10-Q quarterly reports and Form 10-K annual reports that the company already has on file with the SEC.
In compliance with The Securities Exchange Act of 1934, Form 8-K announces events—like an acquisition, bankruptcy, removal of a director or change in the fiscal year—on a current, as-needed basis. The wide variety of events that warrant filing the form can be related to a company’s business and operations, accounting and finances, market performance and activities, corporate leadership, asset-backed securities, regulation fair disclosure (FD) and other areas of interest.
Form 8-K filings are displayed publicly on the SEC’s online database, EDGAR (Electronic Data Gathering, Analysis and Retrieval). Most large companies also make their Form 8-Ks available on their own websites, in the Investor Relations or similarly titled section.
- Form DEF 14A
What Is Form DEF 14A?
Also called a “definitive proxy statement,” Form DEF 14A is intended to furnish security holders with adequate information to be able to vote confidently at an upcoming shareholders' meeting. It’s most commonly used with an annual meeting proxy and filed in advance of a company’s annual meeting. The statement must be filed with the Security and Exchange Commission (SEC) by or on behalf of the firm soliciting shareholder votes.
Under The Securities and Exchange Act of 1934, Form DEF 14A ensures that shareholders receive crucial voting information including: when and where a shareholder meeting will be held; voting information and procedures; revocability of proxies; procedure for submitting stockholder proposals; background on the company’s nominated directors; top shareholders and holding details; potential conflicts of interest among directors; board and executive compensation, with details including perquisites; audit fees and committee; and other important details.
When a definitive proxy statement is distributed to shareholders, it’s also filed with the SEC. It becomes public record, available for anyone to view on the SEC's online filing system EDGAR (Electronic Data Gathering, Analysis and Retrieval).
- Form F1
What Is Form F-1?
Form F-1 must be filed with the US Securities and Exchange Commission (SEC) by certain foreign private issuers before they can make an IPO (initial public offering) or other first-time security offering in the United States. The form also serves as a catchall, used to register foreign-issued securities for which no other form is already authorized or prescribed. It doesn’t need to register an entire worldwide equity or debt offering, but it must register those securities to be sold in the United States as well as any possible flow-back of securities into the US.
Required under the Securities Exchange Act of 1933, Form F-1 is intended to protect investors by providing critical information including a prospectus overview, risk factors, planned use of proceeds, corporate structure, financial and debt data, taxation and more.
The form must be submitted to the SEC via the online EDGAR (Electronic Data Gathering, Analysis and Retrieval) system, where it goes on public display. Form F-1 takes an average of nearly 2,000 hours to complete, according to the SEC.
- Form NMFP
What Is Form N-MFP?
Registered money market funds use Form N-MFP to report their portfolio holdings and other information to the US Securities and Exchange Commission (SEC) on a monthly basis.
Under the Investment Company Act of 1940, the form discloses information such as series-level and class-level details about the fund, its schedule of portfolio securities—including net and shadow net asset values, daily and weekly liquid assets and weekly shareholder flows—and basics such as whether the fund is liquidating or merging.
Each Form N-MFP covers one calendar month and must be filed by the money market fund within five days after the end of the month. After 60 days, the filing is displayed publicly on the SEC’s online database EDGAR (Electronic Data Gathering, Analysis and Retrieval) to enable the SEC to better monitor the fund and inform and protect investors.
- Form NSAR
What Is Form N-SAR?
Registered investment management companies use Form N-SAR to disclose information about fund operations and portfolio holdings. Filed with the Securities and Exchange Commission (SEC) on a semi-annual basis, the form protects investors by providing basic information to help them choose a company to trust with their investments.
In compliance with Section 30 of the Investment Company Act of 1940, Form N-SAR provides some detail on an investment management company's leadership, advisors, underwriters and affiliations. In addition, it gives financial information also included in a company’s annual or semi-annual shareholder reports, such as sales of shares, portfolio turnover rate, income and expenses, and total assets and income distributions per security type. The Act eliminated the requirement that a registered investment company’s principal executive and financial officers certify Form N-SAR.
Form N-SAR is filed using the SEC’s EDGAR (Electronic Data Gathering, Analysis and Retrieval) system, where it can be viewed freely by the public.
- Form S1
What Is Form S-1?
Required by the Securities and Exchange Commission (SEC), a Form S-1 must be filed by any company aiming to go public. The company files an S-1 in order to register its new securities before it can offer shares in the company on a public, national exchange.
Form S-1, a registration statement under The Securities Act of 1933, requires a company to provide information on the company’s business model, competition and planned use for capital proceeds. For the planned security, the company must also furnish a prospectus, offering price methodology and whether any dilution will be caused to other listed securities. In addition, the company will need to submit a disclosure of any material business conducted between the company and its directors and external counsel.
Companies file a Form S-1 using the SEC’s EDGAR (Electronic Data Gathering, Analysis and Retrieval) online filing system. Form S-1 related to an IPO does require the use of XBRL (eXtensible Business Reporting Language). A secondary S-1 filing may require XBRL if the filer is an XBRL filer and after the price or price range is included, all financial statements included in the S-1—including annual financial statements—will need to be covered by XBRL exhibits.
Once filed, the Form S-1 becomes public record, enabling potential investors to conduct due diligence before shares become available. However, since April 2012, the JOBS Act allows emerging growth companies to keep their Form S-1 confidential up to 21 days prior to their IPO road show.
Form S-1/A is used for filing amendments to a previously filed Form S-1.
- Form S11
What Is Form S-11?
A registration statement under The Securities Exchange Act of 1933, Form S-11 must be filed with the Security and Exchange Commission (SEC) by any real estate investment trust (REIT) or other company owning real estate for investment purposes, if it intends to offer securities.
A trust or company files the completed Form S-11 in the SEC online filing system, EDGAR (Electronic Data Gathering, Analysis and Retrieval). Its purpose is not only to register the securities to be issued, but also to disclose crucial information to all potential investors where it can be publicly viewed.
Form S-11 is submitted with information including prospectus details, pricing, plans for use of proceeds, operating data, selected financial data, investment and other financial policies and other reporting described by SEC Regulation S-K.
- Form S3
What Is Form S-3?
Form S-3 is a simplified form for registering securities with the Securities and Exchange Commission (SEC). The form can be used by a company to register securities under the Securities Act of 1933, instead of using Form S-1. Form S-3 is intended to disclose essential company and stock information to potential investors, commonly before the initial public offering (IPO) of common stock or preferred stock.
For a company to qualify to use Form S-3, however, it must be based in the United States only and have met specified dividend and debt requirements as well as all reporting deadlines and requirements under sections 12 or 15(d) of The Securities Exchange Act of 1934 for a minimum of 12 months—including an annual Form 10-K, quarterly Form 10-Qs and periodic Form 8-Ks.
Form S-3 calls for a prospectus, which will ultimately be distributed to potential investors, and it includes undertakings, exhibits and disclosures that become publicly viewable on the SEC EDGAR (Electronic Data Gathering, Analysis and Retrieval) online filing system.
Filing a Form S-3 offers distinct time and cost savings over filing a Form S-1.
- Form S4
What Is Form S-4?
Form S-4 must be submitted to the Securities and Exchange Commission (SEC) by a publicly traded company involved in a merger or acquisition between companies or by companies carrying out a business exchange offer.
Also called a registration statement under The Securities Exchange Act of 1933, Form S-4 is intended to curtail fraud by requiring companies to furnish details related to share distribution, terms and amounts, as well as any other key merger or exchange offer information. (Exchange offers occur when a company offers to exchange securities for similar securities at less demanding terms, often in an attempt to avoid bankruptcy.)
The completed Form S-4 needs to be EDGARized and, once filed, becomes publicly viewable in the SEC online filing system, EDGAR (Electronic Data Gathering, Analysis and Retrieval).
Submissions of Form S-4 are kept under close watch by investors seeking opportunities for fast gains from mergers and acquisitions (M&A) deals.
- Form SEC 1 A
What Is SEC Form 1-A?
SEC Form 1-A is an offering statement required by the Securities and Exchange Commission (SEC) for the registration of certain securities that are qualified under Regulation A.
What Is IFRS (International Financial Reporting Standards)?
The IFRS Taxonomy is a list of elements, and their relationships, which reflect the presentation and disclosure requirements of the International Financial Reporting Standards (IFRS). These elements, or tags, are used to mark-up IFRS financial statements so they can be communicated in a standardized, computer-readable format.
International Financial Reporting Standards are a set of accounting principles initially outlined to harmonize EU practices that has become a de facto global accounting standard. Since 2001, the International Accounting Standards Board (IASB) has taken responsibility for codifying and developing IFRS principles to achieve the harmonization necessary to support global financial reporting.
The IASB also develops and maintains the IFRS Taxonomy, which is similar to a dictionary of financial reporting items. By selecting tags from the IFRS Taxonomy which match the related disclosures in the company’s IFRS financial statements, the company is able to prepare computer-readable financial statements in an XBRL (eXtensible Business Reporting Language) format, which is required by various regulators.
- Investment Advisers Act of 1940
What Is The Investment Advisers Act of 1940?
The Investment Advisers Act of 1940 is a law passed by Congress and administered by the Securities and Exchange Commission (SEC) to regulate and prevent fraudulent conduct by money managers, investment consultants and financial planners. These various investment advisers are required to operate against a code of conduct set forth under the Act to ensure that all conflicts of interest between them and their clients are eliminated. The Act subjects advisers to five kinds of requirements: fiduciary duties to clients; substantive prohibitions and requirements; contractual requirements; record-keeping requirements; and oversight and inspection by the SEC.
Amendments to the Act require investment advisers with more than $25 million under management to register with the SEC. The Act also delineates investment advisers’ liability while giving structure around what fees and commissions advisers can collect from their clients.
The Wall Street crash of 1929, which precipitated the Great Depression, was the impetus for the creation of the Investment Advisers Act of 1940. More specifically, the SEC published a report on investment trusts and investment companies in 1935 that warned against giving certain investment advisers free reign. The report recommended they be monitored and regulated to guard against the dispensing of advice that favors—whether consciously or not—the advisers’ own financial interests.
Investment advisers must file Form ADV electronically with the SEC via IARD (the Investment Adviser Registration Depository) and state securities authorities on an annual basis. On Part 1 of this form, investments advisers are required to include their educational background, experience, exact type of business they’re engaged in, assets, information on clients, history of a legal and/or criminal nature, and type of investment advice they offer. Part 2 of Form ADV comprises the narrative brochure that advisers must share with their clients. When filed, Form ADV is made available to the public on the SEC’s Investment Adviser Public Disclosure website.
- Investment Company Act of 1940
What Is The Investment Company Act of 1940?
Considered one of the most important pieces of regulation governing the US stock market, the Investment Company Act of 1940 is a law that Congress passed to define and regulate mutual funds and closed-end funds as well as hedge funds, private equity funds and holding companies. Enforced by the Investment Management division at the Securities and Exchange Commission (SEC), it is intended to “mitigate and eliminate the conditions which adversely affect the national public interest and the interest of investors.”
The Investment Company Act of 1940—along with the Investment Advisers Act of 1940—was put in place in response to the Wall Street crash of 1929 and the ensuing Great Depression. The Investment Company Act’s purpose was to build investor confidence in investment companies—which were relatively new at that time—by reducing conflicts of interest. It was also intended to protect the public interest by requiring investment companies disclose key information concerning their financial health, structure, investment policies and objectives using Form N-SAR.
Under this act, investment companies with more than 100 investors are required to register with the SEC. They are also required to have a board of directors, with 75% of board members being independent. Additionally, the Act requires mutual funds to limit the use of leverage and maintain a certain amount of cash that will cover investors who want to sell their shares at any time.
With the advent of the Dodd-Frank Act of 2010, the Investment Company Act of 1940 received various updates including new regulations around mutual and hedge funds. That said, a number of hedge funds are able to exempt themselves from the Investment Company Act based on Sections 3(c)(1) and 3(c)(7).
The SEC does not supervise or make specific judgments on the investments an investment company chooses to make. Certain commodity pools as well as managed future funds do not fall under the Act’s jurisdiction.
- ISO 13485 2003
ISO 13485 is based on ISO 9001 with a focus on the design, development, production and installation of medical devices and related services. This standard emphasizes “maintaining” effectiveness of processes, rather than the “continual improvement” that is stressed in ISO 9001. Requires more documentation, monitoring and measurement of data, risk management processes, stresses the need to “maintain effectiveness” of the system.
- ISO Standards
What is ISO (International Organization for Standardization)?
ISO is an acronym for International Organization for Standardization, the Geneva-based non-governmental organization that is the world's largest developer and publisher of voluntary international standards. The ISO currently includes members from 162 countries, with 3,368 technical bodies responsible for standards development.
Since 1946, the ISO has published more than 19,500 international standards for industries ranging from agriculture to technology. These specifications enable investors and consumers to assess their options consistently across businesses, borders and languages. They also provide baseline measures for progress in emerging fields, from software security to renewable energy.
ISO standards establish exacting, world-class trade specifications for quality, safety and efficiency in goods and services. Meeting current ISO standards is a rigorous process with industry-specific documentation requirements, and can prove time-intensive even with the fast-track process.
- Inline XBRL or iXBRL
What is iXBRL?
Inline XBRL (iXBRL) is a filing format that merges the traditional HTML file with the XBRL instance document file. The result is a combined file that is submitted to a regulator that contains both the traditional financial statements and the XBRL tagging information. The XBRL tags are embedded in the traditional HTML document, thus removing the need for a separate XBRL file. In other words, filers can prepare a financial report that looks like a traditional financial statement and is appealing to the eye, but has all of the rich XBRL data embedded under the text.
- Jumpstart our business startups (JOBS) Act
What Is Jumpstart Our Business Startups (JOBS) Act?
The Jumpstart Our Business Startups (JOBS) Act was passed by Congress and signed into law by President Barack Obama to encourage funding of small businesses and startups in the US. Comprising seven titles, it was designed to relax federal regulations and allow for equity crowdfunding, making it easier for companies to access funding while giving individuals a chance to invest in private companies.
The Access to Capital for Job Creators and Crowdfunding acts make up Titles II and Titles III, which are the two key sections of the JOBS Act. Their goal is to lower the barrier for accessing financing for startups. Title II spawned Rule 506(c) of Regulation D, a securities exemption that lets companies publicly advertise investment offerings, which are then open to investment from high net-worth individuals—also known as accredited investors. Meanwhile, Title III of the JOBS Act allows individuals with a net worth below $100,000 to buy shares in privately held companies that want to raise up to $1 million in a 12-month period.
Title IV, the Small Company Capital Formation Act, updates Regulation A as a means of lowering compliance costs to make it easier for small public offerings of securities—not exceeding $5 million in any 12-month period—to register with the Securities and Exchange Commission (SEC).
As for Title I of the JOBS Act, this is also known as the Reopening American Capital Markets to Emerging Growth Companies Act, while Titles V to VI cover registration and deregistration requirements pertaining to the Securities Exchange Act of 1934. Title VII is also called the Outreach on Changes to the Law or Commission.
Companies conducting an equity crowdfunding offering are required to file Form C (Crowdfunding) with the SEC as well as disclose certain information to investors. This information includes the price of the securities; the target offering amount; the company’s financial status; financial statements; information on officers, directors and various owners; as well as an annual report.
- MA SEC Form
What Is SEC Form MA?
SEC Form MA, or the Municipal Advisor Form, must be filed with the Securities and Exchange Commission (SEC) by municipal advisors. A municipal advisor is “a person (who is not a municipal entity or an employee of a municipal entity) providing advice to or on behalf of a municipal entity or obligated person with respect to municipal financial products or the issuance of municipal securities, or that undertakes a solicitation of a municipal entity or obligated person.”
The requirement for filing SEC Form MA, as mandated by Section 975 of the Dodd-Frank Act—and which amended Section 15B of the Securities Exchange Act of 1934, went into effect on July 1, 2014. According to Section 15B, it’s against the law for any municipal advisor to provide counsel—and receive fees—on when to issue securities and how to invest the profits from their sales without disclosing this activity via SEC Form MA, unless an exemption applies.
SEC Form MA must be filed with the SEC in XML (extensible Markup Language) format via the EDGAR (Electronic Data Gathering, Analysis and Retrieval) system.
Every municipal advisory firm must renew Form MA each year by filing an annual update within 90 days after the end of its fiscal year (calendar year for sole proprietors).
- SEC Form N-PX
What Is SEC Form N-PX?
SEC Form N-PX details the proxy voting record of mutual funds and other registered management investment companies for the most recent 12-month period ending on June 30. In accordance with Section 30 of the Investment Company Act of 1940 and Sections 13 and 15(d) of the Securities Exchange Act of 1934, SEC Form N-PX must be filed with the Securities and Exchange Commission (SEC) no later than August 31 of each year.
A number of mutual funds and registered management investment companies disclose how they vote proxies relating to the portfolio securities they hold on their websites. If they do not post this information online, then shareholders can request this information and must then receive the proxy voting record within three business days, free of charge. Mutual funds share how they will provide this information in their annual or semi-annual report to shareholders.
SEC Form N-PX must contain the name of the issuer, exchange ticker symbol and Committee on Uniform Security Identification Procedures (CUSIP) number of the portfolio security; the shareholder meeting date; a short description of the matter voted on including whether it was proposed by the issuer or the security holder; whether and how the fund cast its vote on the matter as well as if it voted for or against management. The information is submitted via EDGAR (Electronic Data Gathering, Analysis and Retrieval) system and displayed publicly via the SEC’s website: sec.gov.
- SEC Form N-Q
What Is SEC Form N-Q?
Mutual funds and other registered investment management companies must disclose their portfolio holdings on SEC Form N-Q under Section 30(b) of the Investment Company Act of 1940 and Sections 13(a) and 15(d) of the Securities Exchange Act of 1934. Funds must file the form with the Securities and Exchange Commission (SEC) within 60 days of the close of the first and third fiscal quarters of each year.
The purpose of these filings is to provide information to potential investors around whether a given index fund includes shares of a particular company or set of companies to which they might have ethical or religious objections.
The SEC may also apply the information provided on SEC Form N-Q in its regulatory, disclosure review, inspection and policymaking roles. The fund’s principal executive and financial officers must sign and certify the information provided in the form, in accordance with Section 302 of the Sarbanes-Oxley Act of 2002.
Small business investment companies are exempt from filing SEC Form N-Q, and instead must file Form N-5. SEC Form N-Q must be filed electronically via the SEC’s EDGAR (Electronic Data Gathering, Analysis and Retrieval) system, where it is made public. It does not need to be delivered to shareholders.
- SEC Form 1-A
What Is SEC Form 1-A?
SEC Form 1-A is an offering statement required by the Securities and Exchange Commission (SEC) for the registration of certain securities that are qualified under Regulation A. This regulation was revised in 2015 to make it more useable and available for offerings up to $50 million. Also known as the Regulation A Offering Statement under the Securities Exchange Act of 1933, SEC Form 1-A is filed to disclose key information to investors as a means of preventing fraud in the sale of the securities that are offered.
Two tiers of offerings fall under Regulation A. They include Tier 1 offerings of securities up to $20 million in a 12-month period and Tier 2 offerings of securities up to $50 million in a 12-month period. Both Tier 1 and 2 issuers are required to file and qualify an offering statement on SEC Form 1-A.
Form 1-A may also be filed confidentially as Form DOS (Draft Offering Statement) similar to DRS (Draft Registration Statements). Any non-public submissions must be publicly filed, or disseminated, no later than 21 calendar days before qualification of the offering statement.
The offering statement is made up of three parts and must be prepared by all entities seeking exemption under Regulation A. Part 1 of SEC Form 1-A must be delivered in XML (eXtensible Markup Language) format. Parts II and III must be provided in standard EDGAR (Electronic Data Gathering, Analysis and Retrieval) format (HTML or ASCII) that adheres to SEC EDGAR filing guidelines.
- SEC Form 144
What Is SEC Form 144?
When an executive officer, director or affiliate of a publicly traded company places an order to sell a specified number of unregistered shares within the next three months, they must file SEC Form 144 with the Securities and Exchange Commission (SEC) as a notice of their intent to sell. This requirement is pursuant to Rule 144 under the Securities Act of 1933, which regulates the resale of restricted securities and securities held by affiliates.
Certain conditions must be met in order for the sale to be exempt from the Securities Act registration requirements. They include the following:
restricted securities must have been held by SEC-reporting companies for at least six months and at least one year for non-reporting companies
the sale must not represent more than 1% of outstanding shares
adequate public information about the issuer must be made available
a brokerage firm or stockbroker must handle the transaction
SEC Form 144 must be filed with the SEC at the time the sell order is placed with the broker if the seller is an affiliate and intends to sell more than 5,000 shares or securities with a value in excess of $50,000
Securities include common stock, preferred stock and debt securities, which includes asset-backed securities and nonparticipating preferred stock. If 90 days pass without a sale, a new SEC Form 144 must be filed. Form 144 can be sent electronically to the SEC’s EDGAR (Electronic Data Gathering, Analysis and Retrieval) system or filed in paper format. There is currently no requirement to file Form 144 on EDGAR.
- One K SEC Form
What Is SEC Form 1-K?
SEC Form 1-K must be filed on an annual basis with the Securities and Exchange Commission (SEC) by issuers that have completed a Tier 2 offering under Regulation A. Tier 2 comprises offerings of securities up to $50 million in a 12-month period.
This annual report, which must be filed within 120 calendar days after the end of the fiscal year covered by the report, includes two parts. Part I of SEC Form 1-K is delivered in XML (eXtensible Markup Language) format and contains basic information on the issuer along with its Regulation A offerings.
Meanwhile, Part II of SEC Form 1-K is where the issuer must disclose information on its business, directors, officers and security-holders. Disclosures must also include information on related party transactions and interest of management and others in certain transactions. The issuer must also share audited financial statements for the two most recently completed fiscal years as well as analysis of financial condition and results of operations.
SEC Form 1-K must be filed with the SEC electronically by means of the EDGAR (Electronic Data Gathering, Analysis and Retrieval) system, where it’s then displayed publicly on SEC.gov.
- SEC Form 1-Z
What Is SEC Form 1-Z?
SEC Form 1-Z must be filed with the Securities and Exchange Commission (SEC) by issuers that have qualified an offering under Regulation A. This exit report must include certain types of information based on the tier of offerings.
Tier 1 issuers—comprising offerings of securities up to $20 million in a 12-month period—need to file an exit report on SEC Form 1-Z within 30 calendar days after the termination or completion of its Regulation A offering. The number of securities sold; the names of underwriters and other service providers involved as well as the fees they received; and net proceeds to the issuer must all be included in the exit report.
Certain Tier 2 issuers—comprising offerings of securities up to $50 million in a 12-month period—can file SEC Form 1-Z to discontinue the filing of ongoing reports under Regulation A. The exit report must certify that the issuer has met the requirements for terminating its ongoing reporting obligations under Regulation A. Most importantly, the issuer must disclose the approximate number of holders of record of each class of securities the issuer has offered in Tier 2 offerings.
SEC Form 1-Z, which is XML-based, is filed through the EDGAR (Electronic Data Gathering, Analysis and Retrieval) system.
- Periodic and Interim Reporting
What Is Periodic & Interim Reporting?
Periodic and interim reporting is the practice of providing company performance reports for periods shorter than a fiscal year, such as monthly, quarterly or semi-annual reports. Known as periodic reports, interim reports or interim statements, these updates provide important company information between annual reporting periods.
To help protect investors and keep the public informed, regulations typically require public companies to submit company performance reports more than once a year. Although interim reports are not usually audited, companies must review them to ensure accuracy and distribute them in a timely manner.
Publicly held companies in the US are usually subject to interim reporting requirements, including filing quarterly reports with Form 10-Q in addition to annual reports with Form 10-K. Quarterly reports usually include a balance sheet, income statement and statement of cash flows.
When public companies in the US make important announcements such as an executive leadership change or bankruptcy, they may also be required to file a current report with Form 8-K. Foreign companies operating in the US may be required to report corporate news and press releases with Form 6-K.
- Registration Forms
What Are Registration Forms?
Registration forms are documents notifying the SEC of the issuer's intent to operate as an investment company, in accordance with US regulations.
The first document that must be filed with the SEC is a notification of registration on Form N-8A, followed within three months by a registration statement on the appropriate SEC form for the type of investment or securities company the issuer is registering. Registration forms that the issuer may submit include Form N-1A for mutual funds; Form N-2 for closed-end funds; Form N-3 for separate accounts offering variable annuity contracts with management investment companies; Form N-4 for separate accounts offering variable annuity contracts with unit investment trusts (UITs); and Form N-6 for separate accounts offering variable life insurance policies with UITs.
- Regulation A
What Is Regulation A?
Regulation A, also known as Reg A, allows companies to offer and sell securities to the public without having to register the securities with the Securities and Exchange Commission (SEC). The regulation exempts small- to medium-sized companies from registration requirements in order to make it easier to raise capital under two different tiers. These two tiers went into effect when the SEC adopted final rules in March 2015 to implement Section 401 of the Jumpstart Our Business Startups (JOBS) Act. Reg A also allows companies to publicly promote themselves as a means of attracting investors.
Under Tier 1 of Regulation A, a company can offer up to $20 million in any 12-month period. Requirements include filing Form 1-A—similar to a prospectus—that’s subject to review and qualification by the SEC along with the securities regulator in the states where the offering is taking place. The offering circular is the narrative portion of SEC Form 1-A and is shared with potential investors.
Under Tier 2 of Regulation A, a company can raise up to $50 million in any 12-month period. Issuers in this case must provide an offering statement to qualify their offerings with the SEC but do not have to register or qualify their offerings with state securities regulators. With both Tier 1 and Tier 2, the offering circular must contain critical information such as details about the offering and the securities offered; investment risks; any selling shareholders; specifics on the company’s business, management, performance and plans; and financial statements—with Tier 2 companies, financial statements must be audited.
Companies issuing under Tier 2 must also file regular reports with the SEC, though they are exempt from having to file quarterly reports. Semiannual (Form 1-SA) and annual reports (Form 1-K) along with interim current reports (Form 1-U) are required of these Tier 2 companies under Regulation A.
In some cases, a Tier 2 company may apply to be listed on a national exchange. If it meets the requirements for that exchange, the company will then need to file more extensively, including submitting quarterly reports on a regular basis.
- Regulation C
What Is Regulation C?
Regulation C implements the Home Mortgage Disclosure Act (HMDA) of 1975. It’s intended to provide the public with information on whether lending institutions—such as banks, savings associations, credit unions and other mortgage-lending institutions—are serving prospective buyers with the housing credit needed in the communities where the institutions are located.
HMDA and Regulation C came about in response to public concern over credit shortages in—and the subsequent decline of—certain geographic areas. The regulation is also intended to help public officials appropriately distribute public investments from the private sector to areas where funding is needed. And it’s also aimed at helping identify discriminatory lending activities.
Institutions providing mortgages that are government-backed must file disclosure reports on an annual basis that include the quantity and dollar amounts of all mortgages provided. Lending institutions with total assets that fall below $10 million are exempt from Regulation C.
- Regulation CE
What Is Regulation CE?
Regulation CE makes certain issues of securities exempt from registration requirements mandated by the Securities Act of 1933—as long as the issuers satisfy the conditions of paragraph (n) of Sec. 25102 of the California Corporations Code. Section 25102(n) exempts offerings to qualified purchasers and includes a “test the waters” provision that allows issuers to publish and share a general announcement of the proposed offering in writing both to qualified and non-qualified investors.
Adopted by the Securities and Exchange Commission (SEC) in 1996, Regulation CE, which provides a coordinated federal-state exemption, is intended to ease the regulatory hardships experienced by small businesses issuing securities, thereby making it easier for them to raise funds. These small businesses comprise California corporations, other business entities organized under California law and other corporations with substantial California ties. The federal-state exemption defers to the California state exemption, which allows California authorities to determine the scope of the exemption.
That said, Regulation CE does impose two federal requirements, the first of which limits offerings to $5 million. The second only allows “restricted securities” in a Regulation CE transaction—meaning, securities can only be resold if the resale is registered with the SEC or the resale is made exempt from this requirement.
The issuer must provide a written disclosure to the purchaser at least five days before the securities are sold or a commitment to purchase is accepted from the purchaser. The disclosure statement must meet the requirements of Regulation D of the Securities Act. It must also include information as required by the California Commissioner of Corporations.
- Regulation D
What Is Regulation D?
Regulation D, also known as Reg Dex or Reg D, comprises three rules—rules 504, 505 and 506—that provide exemptions from registration requirements with the Securities and Exchange Commission (SEC) for certain companies offering and selling securities. These companies are smaller in size and often can’t bear the financial burden of a typical SEC registration. The intent is to expedite the process of raising capital for small companies.
Rule 504 of Regulation D provides exemptions for certain companies offering and selling up to $1 million of their securities in any 12-month period. Under Rule 505, qualifying companies can only offer and sell up to $5 million of its securities in any 12-month period; they must provide financial statements and may sell to an unlimited number of accredited investors as well as up to 35 other individuals; they cannot solicit or advertise to sell their securities; and purchasers may only receive restricted securities.
Meanwhile, Rule 506 of Reg D is a “safe harbor” for the private offering exemption of Section 4(a)(2) of the Securities Act. Companies offering under Rule 506 can raise unlimited capital as long as they do not solicit or advertise to sell their securities; provide financial statements to and answer all questions from prospective buyers. These companies can sell to an unlimited number of accredited investors and up to 35 other purchasers who have the necessary sophistication to evaluate the merits and risks of the prospective investment. Rule 506 of Reg D is the most common choice for filers.
Companies offering under Regulation D must file a Form D in XML format via the SEC’s EDGAR (Electronic Data Gathering, Analysis and Retrieval) system.
- Regulation E
What Is Regulation E?
Regulation E exempts the securities issued by small business investment companies (SBICs) and investment companies acting as business development companies (BDCs) from having to be registered under the Securities Act of 1933. The exemption stands as long as certain conditions are met including keeping the aggregate offering price of all securities that might be sold by an issuer within a 12-month period below $5 million.
Originally adopted in 1958, Regulation E was made available to SBICs, registered under the Investment Company Act of 1940, in accordance with Section 3(c) of the Securities Act. In 1984, Section 3(b) allowed for the eligibility of BDCs for this exemption by permitting the Securities and Exchange Commission (SEC) to include any class of securities to the securities exempted from the Securities Act by Section 3.
Rule 604 of Regulation E states that companies who want to gain this particular exemption have to declare their interest to the SEC by filing Form 1-E. Meanwhile, Rule 605 calls for these companies to furnish an offering circular to entities solicited by the issuer as well as file the offering circular with the SEC if the offering exceeds $100,000.
Regulation E was intended to ease the reporting burden on small business entities. As such, filing Form 1-E on a limited offering with the SEC is less costly and time-consuming than filing a registration statement under the Securities Act. The form includes a range of information, from names and addresses of the issuer, its affiliates, directors, officers and counsel to information on whether the issuer is offering or thinking about offering any other securities.
Form 1-E, which must also include the offering circular, must be filed electronically via the SEC’s EDGAR (Electronic Data Gathering, Analysis and Retrieval) system, where the information is then made available to investors and the financial market in general.
- Regulation Fair Disclosure
What Is Regulation Fair Disclosure (FD)?
Regulation Fair Disclosure, also known as Regulation FD or Reg FD, requires that all publicly traded companies disclose material information to all investors simultaneously. Intended to quash selective disclosure where typically large institutional investors would receive key market information before other smaller, individual investors, Regulation FD makes communication between companies and investors more transparent, frequent and timely.
The Securities and Exchange Commission (SEC) proposed Reg FD in December 1999 due to individual investor demand for even more access to material information. This demand was a result of increasing access and usage of the Internet and the rise of online discount brokers—both of which enabled individual investors to research and trade stocks on their own. Despite protests from large institutional investors, the SEC enacted Regulation FD in October 2000.
The majority of financial information is disclosed in press releases, conference calls, webcasts and via company websites. In April 2013, the SEC announced that companies could also employ social media to share information as long as certain requirements around notifying investors and ensuring unrestricted access were met."
- Regulation S K
What Is Regulation S-K?
Mandated by the Securities Act of 1933, Regulation S-K dictates the reporting requirements for various Securities and Exchange Commission (SEC) filings used by public companies. Regulation S-K applies to SEC Form S-1, which is the registration statement companies file with the SEC during their IPO. It also applies to the ongoing reporting requirements in documents such as Forms 10-K and 8-K.
Regulation S-K also applies to annual or other reports, going-private transaction statements, tender offers, proxy statements, and any other required filings under the Securities Exchange Act of 1934. Regulation S-K works in concert with other rules and regulations that companies must comply with when filing with the SEC.
- Regulation S K
What Is Regulation S-X?
Regulation S-X governs the format and content of financial statements filed with the Securities and Exchange Commission (SEC) by publicly traded securities. These financial statements are prepared according to US GAAP and filed as part of registration statements mandated by the Securities Act of 1933; registration statements under section 12; annual or other reports; under section 13 and 15(d), and proxy and information statements outlined in section 14 of the Securities Exchange Act of 1934.
Closely related to Regulation S-K, Regulation S-X is broad-reaching in that it also encompasses all notes to financial statements and all related schedules. Publicly reporting companies must accurately disclose monies and other financial data, employing consistent terminology, in order to be compliant with Regulation S-X and the Sarbanes-Oxley Act.
Rule 1-02 of Regulation S-X also addresses accountants and auditors, requiring that they be registered and in good standing “under the laws of the place of his residence of principal office.” It further mandates that an accountant retain all records of an audit or review—including correspondence and ancillary documents—of an issuer’s financial statements for a period of seven years.
Regulation S-X was developed with input from the House Committee on Financial Services, Financial Accounting Standards with FASB Accounting Pronouncements, Federal Accounting Standards Advisory Board, Public Company Accounting Oversight Board, American Institute of Certified Public Accountants and International Accounting Standards Board.
Financial statements are often included in annual reports to company shareholders. The SEC also requires financial statements be created and submitted in XBRL (Extensible Business Reporting Language).
- Regulation S T
What Is Regulation S-T?
Regulation S-T outlines rules and procedures pertaining to the Securities and Exchange Commission’s (SEC) Electronic Data Gathering, Analysis and Retrieval (EDGAR) system, by which domestic registrants, foreign private issuers and foreign governments must submit reports, schedules, forms and other filings electronically to the SEC. This includes registration statements under the Securities Act of 1933 as well as registration statements, reports and other disclosures under the Securities Exchange Act of 1934.
The intent of Regulation S-T is to drive the use of the SEC’s EDGAR system as a means of receiving, storing, processing and sharing information more effectively and efficiently. Regulation S-T isn’t intended to replace current paper rules, but acts as a supplement.
Small entities may be exempt from filing electronically if they can prove it is a temporary or continuing hardship. Filers that gain an exemption from submitting key information electronically—under Rule 202 of Regulation S-T—must file on paper based on the existing provisions laid out by the SEC.
- Rule 144A
What Is Rule 144A?
Rule 144A of the Securities Act of 1933 provides a “safe harbor” from certain restrictions normally imposed to protect public investors. It can be applied when reselling private securities to qualified institutional buyers (QIBs)-that is, buyers that are considered financially sophisticated and are legally recognized by securities market regulators as needing less protection.
Rule 144A enables QIBs to more readily trade securities among themselves. It allows them to sidestep the two-year holding period requirement for privately placed securities and allows firms registered with the US Securities and Exchange Commission (SEC), as well as foreign companies providing information to the SEC, to avoid providing financial statements to buyers. However, purchasers are entitled to receive reasonably current information about the issuer upon request.
Rule 144A is a safe harbor widely invoked by non-US companies seeking access to US capital markets, though the securities sold by a foreign private issuer must not be of the same class as a class listed in the United States.
- Sarbanes-Oxley Act
What Is the Sarbanes-Oxley Act (SOX)?
The Sarbanes-Oxley Act of 2002, also known as Sarbanes-Oxley, Sarbox or SOX, was passed by Congress to require public companies and their top management to fully disclose their financial and accounting practices and activities. Sarbanes-Oxley, which comprises 11 sections, also contains provisions that address privately held companies.
Major corporate and accounting scandals that shook investor confidence—such as those surrounding Enron and Worldcom— were the impetus for Sarbanes-Oxley. Sponsored by Senator Paul Sarbanes and Representative Michael G. Oxley, SOX requires that senior management certify the accuracy of their company’s financial statement. It also exacts harsh penalties for fraudulent financial activity and increases oversight by the company board of the directors. And it ensures the independence of outside auditors reviewing corporate financial statements.
In addition, the Sarbanes-Oxley Act requires the Securities and Exchange Commission (SEC) to publish rules and regulations as well as deadlines for compliance by public corporations. Since SOX’s passing, the SEC has set up numerous rules to administer Sarbanes-Oxley. It also created the Public Company Accounting Oversight Board to oversee, inspect and govern accounting firms acting as auditors of the internal control practices of public companies.
Smaller companies with a market cap of less than $75 million are exempt from SOX requirements, according to the Dodd-Frank Act. Meanwhile, countries such as Canada, Germany, France, Australia and Japan have since adopted stricter financial governance laws similar to the major elements set forth in the Sarbanes-Oxley Act.
- Schedule 13D
What Is Schedule 13D?
Schedule 13D must be filed with the Securities and Exchange Commission (SEC) when an entity acquires more than 5% of any class of publicly traded securities in a public company. In accordance to Rule 13D, this particular SEC filing of an initial beneficial ownership must be submitted within 10 days of the transaction.
Schedule 13D is intended to increase transparency around who the large shareholders are in a public company and why they have a stake in it. When a Schedule 13D is filed, it may disclose to the public that a hostile takeover, proxy battle or other “change of control” may soon take place.
Schedule 13D is made up of seven sections ranging from basic information on the security type and class, as well as the contact information for the owner, to exhibits such as letters to management signaling a hostile takeover.
Schedule 13D, which is often submitted with a tender offer, must be filed electronically via the SEC’s EDGAR (Electronic Data Gathering, Analysis and Retrieval) system, where it is made publicly available on sec.gov.
- Schedule 13G
What Is Schedule 13G?
Schedule 13G, a simpler, short-form version of Schedule 13D, can be used to disclose the beneficial ownership of a company in lieu of Schedule 13D as long as certain conditions are met by three categories of owners: a qualified institutional investor in accordance with Rule 12d-1(b), a passive investor based on Rule 13d01(c), and an exempt investor laid out in Rule 13d-1(d).
Qualified institutional investors must file Schedule 13G within 45 days of the end of the calendar year in which they acquired more than 5% of a company. If they acquired more than 10%, then they must file within 10 days of the end of the calendar month in which the acquisition was made. Qualified investors are only eligible if they acquired the securities in the ordinary course of business, without changing or intending to exert control over the issuer. And they must be a regulated entity such as a registered investment adviser or company.
Passive investors must file Schedule 13G within 10 days of a transaction that amounts to more than 5% but less than 20% ownership of a company. They are also only eligible if they do not change or influence control of the issuer.
Meanwhile, exempt investors should file Schedule 13G within 45 days of the end of the calendar year in which they acquired more than 5% of a company. One type of exempt investor is an entity that’s acquired beneficial ownership of over 5% of a class of equity securities that weren’t registered when the acquisition took place but were registered subsequently.
Schedule 13G must be filed electronically via the SEC’s EDGAR (Electronic Data Gathering, Analysis and Retrieval) system, where it is made publicly available on sec.gov.
- Section 16 Forms 3 4 5
What Is Section 16 (Forms 3, 4, 5)?
Section 16 of The Securities Exchange Act of 1934 requires corporate insiders to publicly disclose their company affiliations, material changes in their holdings or unreported insider transactions through various regulatory filings with the US Securities and Exchange Commission (SEC).
Specifically, Section 16 mandates that Forms 3, 4 and 5 be filed by insiders—in other words, company investors who are directly or indirectly beneficial owners of more than 10% of stock in a company or directors and officers of the issuer of the securities.
An insider of a first-time securities issuer or a new insider at an already-registered securities issuer must carry out the initial filing, Form 3. Form 4 is used to report material changes in insiders’ holdings. Form 5 reports any transactions that should have been included on a previous Form 4 or were eligible for deferred reporting such as gifts of shares or multiple small transactions.
Section 16 reporting must be submitted electronically through the SEC’s EDGAR (Electronic Data Gathering, Analysis and Retrieval) system, where it becomes public record. The SEC also requires companies to post the forms on their websites by the end of the next business day after filing them.
Section 16 reporting deadlines were accelerated due to provisions of the Sarbanes-Oxley Act of 2002 (SOX).
- Section 508 Compliance
What Is Section 508 Compliance?
As part of the US Rehabilitation Act, Section 508 outlines responsibilities for access to people with disabilities. According to Section 508 guidelines, federal agencies and their contractors are required to make public documents accessible to people with physical, sensory or cognitive disabilities. This includes companies that provide goods and services to federal agencies and contractors, including healthcare providers and software companies.
Overlooking this requirement has serious consequences for companies that work with federal agencies or contractors. Filings that fail to include accessible documentation may be found non-compliant under US law, incurring penalties for the responsible companies. As a result, Section 508 compliance has emerged as a primary concern in preparation of PDF documentation intended for public release.
- Securities Act of 1933
What Is the Securities Act of 1933?
The Securities Act of 1933, also known as the ‘33 Act or the Truth in Securities law, was the first major federal legislation passed to regulate the sale of securities. It was put into place in response to the stock market crash of 1929 as a means of ensuring better transparency in financial statements to aid buyers in their investment decision-making as well as eliminate fraudulent activity and deceit in the securities market.
Prior to the ‘33 Act, it was left to the states to regulate securities with what were called blue sky laws, which typically applied specific, qualitative requirements on offerings or “merit reviews.” The ‘33 Act doesn’t require such merit reviews, but rather mandates that issuers fully disclose all material information required for shareholders to make a decision on a potential investment.
The Securities Act of 1933 was signed into law by President Franklin D. Roosevelt as part of the New Deal and during the Great Depression. It calls for companies to create a registration statement that includes a prospectus containing detailed information on the security, company and business. All those signing the registration statement, including the company’s senior management and underwriter, must conduct a thorough due diligence to verify that the document is complete and accurate.
Registration statements and their accompanying prospectuses must be filed via the SEC’s EDGAR (Electronic Data Gathering, Analysis and Retrieval) system, where it is made publicly available on sec.gov. These registration statements are examined by the SEC to ensure that they are compliant with disclosure requirements.
- Securities Exchange Act of 1934
What Is the Securities Exchange Act of 1934?
The Securities Exchange Act of 1934 was passed in order to govern the secondary trading of securities in the US. Secondary trading typically takes place through brokers or dealers. Also known as the Exchange Act or the ‘34 Act, this landmark legislation laid the foundation for the financial regulation of all companies listed on stock exchanges including the New York Stock Exchange, American Stock Exchange and Pacific Stock Exchange.
President Franklin D. Roosevelt signed the Securities Exchange Act of 1934 into law in the aftermath of the 1929 stock market crash. The ‘34 Act was also responsible for the creation of the Securities and Exchange Commission (SEC). The Exchange Act not only gives the SEC the ability to enforce US federal securities law, but also investigate potential violations such as insider trading, the sale of unregistered stocks, manipulation of market prices and disclosure of fraudulent financial information.
The Maloney Act amended the Exchange Act in 1938 to allow for creation and registration of national securities associations to oversee the conduct of their members in accordance with the SEC. As a result, the National Association of Securities Dealers (NASD) was formed to supervise brokers and brokerage firms as well as the NASDAQ stock market. The NASD was later broken into two entities in 1996, one entity regulating brokers and firms and the other regulating the NASDAQ market.
If a company has more than 500 shareholders and $10 million-plus in assets, the 1934 Act requires that it regularly file company information with the SEC on an annual basis using Form 10-K as well as quarterly with Form 10-Q. If a company experiences a material event, the SEC mandates the filing of Form 8-K to disclose these changes.
Form 10-Ks, 10-Qs, and 8-Ks must be filed via the SEC’s EDGAR (Electronic Data Gathering, Analysis and Retrieval) system, where they are made publicly available on sec.gov. These statements are examined by the SEC to ensure that they are compliant with disclosure requirements.
- Securities Investor Protection Act of 1970
What Is the Securities Investor Protection Act of 1970?
The Securities Investors Protection Act of 1970 amended the Securities Exchange Act of 1934 and authorized the creation of the Securities Investor Protection Corporation (SIPC). Sponsored by the US government, the SIPC is a non-profit, independent corporation that requires the membership of most registered brokers and dealers under the 1934 Act.
Enacted in 1970, the Securities Investors Protection Act, or SIPA, was intended to build public confidence in securities markets by covering customers for any broker-responsible losses or failures. As such, the SIPC maintains funds which are intended to protect investors against brokers who misappropriate their funds as well as pay them in the event that their broker or dealer goes bankrupt. The SIPC funds are made possible as a result of assessments paid to the SIPC by members based on the gross business they generate from the sale of securities.
The SIPC insures investors for up to $500,000 with cash claims limited to $250,000. This insurance program does not protect against losses due to market conditions. However, when a brokerage firm fails, the SIPC facilitates the transfer of accounts from the failed brokerage to a different member brokerage firm. If the transfer doesn’t go through, then the SIPC pays the investors for the market value of the lost shares or certificates for the stock, and the failed brokerage firm is liquidated.
- Securities Offering
What Is a Securities Offering?
To raise funds for expansion, businesses often opt to raise capital through a securities offering. Many small companies offer equity in the form of common stock, while more established companies may also offer bonds representing their debt obligations. To offer equity or debt securities in the US, companies must either be registered with the SEC or exempt from registration in accordance with the federal Securities Act and state securities laws.
Equity securities grant partial ownership interest to the purchaser, or stockholder. For equity offerings, a company files articles of incorporation specifying the amount and type of stock it plans to issue. To protect investors, state and federal regulations also require companies to disclose specific information to stockholders.
Unless specifically exempt under the Securities Act, companies are required to file a registration statement with the SEC providing key information about the company, its securities and the offering. Once the SEC declares the registration statement effective, the company is allowed to make its initial public offering (IPO). When a company registers an offering with the SEC, it officially becomes a public company.
Registration statements have two parts. The first is the prospectus, which is the legal offering made by a company issuing securities. The prospectus covers key facts about the issuer's business operations, risks, daily operations and management in addition to audited financial statements. The issuer must deliver a prospectus to everyone who buys or offers to buy its securities. The second part of the registration statement includes confidential company information the issuer is not obliged to provide to investors, but must file with the SEC.
Companies typically use the SEC Form S-1 to prepare the registration statement for a securities offering. Rules for regulation statement disclosures are outlined in Regulation S-K, and financial statements must be prepared for registration statements in compliance with Regulation S-X. Completed registration statements are filed using the SEC’s Electronic Data Gathering, Analysis and Retrieval (EDGAR) system.
What Is SEDAR?
The System for Electronic Document Analysis and Retrieval (SEDAR) is Canada's electronic filing system for disclosures by public companies and investment funds. This system allows regulated company and securities information to be consistently collected, shared and filed with the 13 provincial and territorial securities regulatory authorities (the Canadian Securities Administrators, or CSA) in the SEDAR filing system.
Public company and investment fund profiles are available to investors and others on the SEDAR website: www.sedar.com. Online SEDAR profiles include information that most public companies, investment funds and investment fund groups are required to make public in Canada, including addresses, contact information and stock exchange listing.
However, not all SEDAR filings are automatically made public. Some documents filed only with Canadian exchanges are not publicly available. When a prospectus is filed through SEDAR, it’s reviewed by securities regulatory authorities who then make the appropriate documents available via the SEDAR Data Distribution Service.
Some documents don’t require review and are immediately distributed via the SEDAR Data Distribution Service—particularly continuous disclosure documents such as annual reports, financial statements and news releases. No matter whether SEDAR filings are scrutinized by investors or Canadian regulators first, they must be exact, accurate and on time.
- SEC Form TA 1
What Is SEC Form TA-1?
Transfer agents must file SEC Form TA-1 in compliance with Section 17A of the Securities Exchange Act of 1934 to register or amend registration with one of four regulatory agencies—Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation or the Securities and Exchange Commission (SEC).
Transfer agents, which are typically banks or trusts though can sometimes comprise companies that serve as their own agents, facilitate secondary trades.
Activities involve tracking and recording changes of ownership, maintaining the issuer’s security holder records, canceling and issuing certificates, and distributing dividends.
SEC Form TA-1 must be filed with the SEC in XML format via the EDGAR (Electronic Data Gathering, Analysis and Retrieval) system. Information supplied on the form will be made publicly available on sec.gov. Registration of a transfer agent becomes effective 30 days after receipt of the application, unless the filing doesn’t comply with applicable requirements or the SEC accelerates, denies or postpones registration.
- SEC Form TA 2
What Is SEC Form TA-2?
Transfer agents submit SEC Form TA-2 as a means of providing an annual report of transfer activities. These activities comprise transactions between issuers of securities and their holders—from recording ownership changes to distributing dividends. They submit SEC Form TA-2 to one of four regulatory agencies—Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation or the Securities and Exchange Commission (SEC).
SEC Form TA-2 is required based on the provisions set forth under Section 17A of the Securities Exchange Act of 1934. This form is used as a means of providing oversight of transfer agents by regulatory bodies. The SEC also conducts transfer agent inspections on a periodic basis.
Transfer agents must file SEC Form TA-2 with the SEC in XML format via the EDGAR (Electronic Data Gathering, Analysis and Retrieval) system. These annual reports are then made publicly available on sec.gov.
- TA-W SEC Form
What Is SEC Form TA-W?
SEC Form TA-W is a notice of withdrawal from registration that transfer agents submit in compliance with Section 17A of the Securities Exchange Act of 1934. Using this form, transfer agents must supply the reasons for terminating the performance of their functions or for otherwise requesting to withdraw registration.
Additionally, SEC Form TA-W details whether the registrant intends to perform a transfer agent function in the near future; if that agent is directly or indirectly involved in any legal actions or proceedings due to their performance of transfer agent functions for a security; and if there’s a successor transfer agent who will take on the current agent’s activities.
SEC Form TA-W must be filed in XML format with the Securities and Exchange Commission (SEC) EDGAR system, where it is made publicly available on sec.gov. Upon signing the form, registrants consent to making all books and records available for examination by authorized representatives of the SEC.
- SEC Form 13F
What Is SEC Form 13F?
Institutional investment managers having equity assets under management of $100 million or more must use SEC Form 13F—pursuant to Section 13(f) of the Securities Exchange Act of 1934—to disclose information about themselves as well as their recent investment holdings. Also known as the Information Required of Institutional Investment Managers Form, this report must be filed with the Securities and Exchange Commission (SEC) within 45 days of the end of each quarter.
An entity that invests in, or buys and sells, securities for its own account as well as a natural person or an entity that exercises investment discretion over the account of any other natural person or entity constitutes an institutional investment manager. Registered Investment Advisers (RIAs), insurance companies, pension funds, hedge funds, mutual funds, banks and trust companies are all types of institutional investment managers.
SEC Form 13F must include the issuer name of all Section 13(f) securities as well as the class of security listed, number of shares owned and the fair market value of the securities listed as of the end of the calendar quarter during which the report is filed. Section 13(f) securities may include equity securities that trade on an exchange (e.g., NYSE, AMEX, NASDAQ), shares of closed-end investment companies, shares of exchange-traded funds (ETFs) and certain convertible debt securities.
SEC Form 13F contains two parts, Form 13F and Information Table, that must be filed in XML. These filings provide key data points by which to gauge investment management exposures, performance attribution and associated risks. These filings are filed on EDGAR and subsequently made publicly available via the SEC’s website.
- Thirteen H SEC Form
What Is SEC Form 13H?
SEC Form 13H is used by large traders to register with the Securities and Exchange Commission (SEC) in accordance with the requirements set forth in Section 13(h) of the Securities Exchange Act of 1934. This reporting form is a means by which the SEC can identify traders dealing in a sizeable amount of trading activity, collect information on as well as analyze their trading activity.
The SEC Division of Trading and Markets instituted large trader reporting with the development of trading technology that allowed for the speedy execution of a high volume of trading. A large trader is defined as a person—including a firm or individual—whose transactions in NMS (national market system) securities equal or exceed two million shares or $20 million during any calendar day, or 20 million shares or $200 million during any calendar month.
An NMS security is “any security or class of securities for which transaction reports are collected, processed and made available pursuant to an effective transaction reporting plan, or an effective national market system plan for reporting transactions in listed options.” This typically includes any security or class of securities listed on national exchanges or traded through NASDAQ.
Large traders are required to submit an initial filing on SEC Form 13H within 10 days after the Large Trader effects aggregate transactions equal to or greater than the identifying activity level. They will then receive a large trader identification number that must be shared with all US registered broker-dealers effecting transactions on their behalf. Following the initial filing, large traders must make an annual filing on SEC Form 13H-A within 45 days from the end of each calendar year. Filers must amend their annual filings on a quarterly basis on Form 13H-Q if there are any material changes.
Large traders must file Form 13H-I to make their status as a Large Trader Inactive, or file Form 13H-T in order to terminate their filing requirements.
SEC Form 13H is filed via the EDGAR (Electronic Data Gathering, Analysis and Retrieval) system. As these filings typically contain confidential information, they are not made publicly available.
- The Trust Indenture Act of 1939
What Is the Trust Indenture Act of 1939?
The Trust Indenture Act of 1939 mandates the use of a formal written agreement, or indenture, to fully disclose the legal obligations pertaining to certain debt securities or bonds, in general including debt securities sold in transactions registered with the Securities and Exchange Commission (SEC). Both the bond issuer and the bondholder must sign the indenture.
Administered by the SEC, the Trust Indenture Act also requires the appointment of an independent trustee to act for the benefit and protect of the rights of the holders of the securities. That trustee must make key financial disclosures to securities holders on a semi-annual basis.
The Act, which supplements the Securities Act of 1933, was intended to address flaws in the trustee system specifically that trust indentures at that time didn’t require evidence of an obligor’s performance, didn’t have to adhere to any disclosure or reporting requirements, and blocked collective bondholder action. The Trust Indenture Act protects holders’ rights to sue individually. It also exempts securities—typically municipal bonds—that aren’t subject to securities registration requirements.
- Twelve B 25 SEC Form
What Is SEC Form 12b-25?
Also known as the Notification of Late Filing, SEC Form 12b-25 is filed with the Securities and Exchange Commission (SEC) by a company that determines it is unable to file a required periodic report when it is due without unreasonable effort or expense for SEC Form 10-K, 20-F, 11-K, N-SAR, N-CSR, 10-Q or 10-D. This filing is intended to circumvent penalties associated with the failure to file these types of required forms in a timely manner.
A company filing SEC Form 12b-25 must include information on why they are submitting a late filing as well as expectations for any significant events or changes that might set it apart from the prior year’s filing. Once Form 12b-25 is filed, a company is still considered EDGAR compliant as long as the document being filed late, is filed within 5 calendar days for a 10-Q or 10-D and 15 calendar days for all other form types, from the original due date.
A company filing SEC Form 12b-25 would file under the respective NT Submission Form Type (NT 10-K, NT 20-F, NT 11-K, NT NSAR, NT NCSR, NT 10-Q or NT 10-D).
- US GAAP Taxonomy
What Is the US GAAP Taxonomy?
GAAP is an acronym for Generally Accepted Accounting Principles, the standard accounting recording and reporting procedures used to compile financial statements to meet US industry standards and regulations. The GAAP aims to ensure consistency in financial reporting, so that investors can better assess financial statements for investment purposes.
Through complex guidelines, GAAP sets out rules covering the fine details of financial statements, from balance sheet classification to revenue recognition. These guidelines are codified in the GAAP Taxonomy Architecture, which serves as the basis for XBRL.
Some financial accounting inconsistencies remain, however. Although US companies follow GAAP rules, other countries apply London-based International Financial Reporting Standards (IFRS). This gap in standards affects global business practices, from accounting to stock market valuations.
Efforts are currently underway by the SEC to adopt IFRS standards, and resolve conflicts and confusion in international financial reporting in cooperation with the International Accounting Standards Board (IASB).
What Is XBRL?
XBRL is an acronym for “eXtensible Business Reporting Language,” a standard for communicating financial data in a machine-readable format. In technical terms, XBRL is a form of XML (eXtensible Markup Language) that allows financial data to be tagged, providing more efficient consumption of the data. Since 2009 the US Securities and Exchange Commission (SEC) has required that, as part of the Electronic Data Gathering, Analysis and Retrieval (EDGAR) program, periodic financial reporting be submitted using the XBRL format.
Many companies submit financial statement data in XBRL-tagged interactive data files to comply with SEC regulations. This is convenient for investors, who can now more quickly analyze a company's financial statements using the standardized computer-readable tagged data, instead of reading through the paper-based financials and finding data by searching manually.
Increasing reliance on interactive data makes the accuracy of XBRL tagging extremely important—one mistake can introduce validation errors that delay an SEC filing, or mislead an investor that is consuming the XBRL financial statement data.