A public offering provides an excellent opportunity for companies to raise funds and provide a way to reward original investors and employees for their investment. Public offerings involve the sale of securities to investors, with broad access for the public to buy. As part of the public offering, businesses must evaluate the forms that they have to file with the U.S. Securities and Exchange Commission. SEC Form 1-Z relates to the reporting requirements for companies having certain types of public offerings. Wondering, “What is Form 1-Z?” This guide provides relevant information about the form, including the types of data required and the reasons to complete it.
What Is SEC Form 1-Z?
When companies make a public offering, they may use certain SEC regulations to streamline the reporting of the offering. Specifically, Regulation A allows qualified businesses to skip registration, depending on the size of the offering. Companies using Regulation A to exempt their registration requirements fall into one of two tiers. Under Tier 1, public offerings of less than $20 million in 12 months must use SEC Form 1-Z for SEC company filings at the conclusion of the offering. For Tier 2 issuers, public offerings up to $75 million in a year require continuous reporting. Form 1-Z allows them to discontinue these reports.
Key Components of SEC Form 1-Z
Fundamentally, SEC Form 1-Z exists to allow companies to conclude their reporting requirements regarding a public offering, whether they classify as a Tier 1 or Tier 2 issuer. In the form, businesses must provide a range of data points about the offering, including:
- Information about the issuer
- Details about the offering, such as the amount of securities sold or fees incurred as a result of the offering
- Certification that the company qualifies to end the reporting process
The form is designed to cover both tiers’ reporting requirements, which means that companies only need to fill out the relevant portion of the form. Tier 1 offerings require businesses to identify the issuer and describe the results of the offering. For Tier 2 offerings, companies must provide the issuer information and confirm that they meet the requirements for the end of reporting.
Common Scenarios for Filing SEC Form 1-Z
Not all public offerings require filing SEC Form 1-Z. Companies starting a public offering under Regulation A terms use Form 1-Z for one of the following reasons:
- Completion of Offering: When the offering concludes, companies file details about the success of the offering.
- Abandonment of Offering: Some public offerings do not generate the funds that companies expect, which might lead the organization to abandon the offering and take a different route.
- Voluntary Termination: Companies that no longer need to file continuous reporting can use the form to establish a voluntary termination of reporting requirements.
Companies may need to file additional forms, depending on their reasons for filing.
Implications of Filing SEC Form 1-Z
As a rule, investors prefer to invest in companies who follow reporting requirements as appropriate. Filing Form 1-Z allows businesses to demonstrate to investors that they have complied with SEC regulations, helping them to build trust and credibility. Businesses using the form to terminate their reporting requirements should evaluate the reasons to continue or discontinue even if they meet the guidelines to conclude the reporting process. Many investors rely on regular reporting as a way of determining whether to invest with a company. Ending reporting may decrease the transparency that these investors expect.
Get Professional SEC Filing Help
Filing SEC Form 1-Z allows companies to meet the terms of the SEC reporting requirements for a public offering. Only businesses using Regulation A exemptions need to complete the form. Since SEC forms change over time, many companies can benefit from software to handle the details. DFIN offers an expert solution to confirm that your business follows important SEC guidelines. Contact us to learn more about our SEC filing software or try out our SEC filing calendar.
