Mastering S-1 Filing Requirements in Your Pre-IPO Journey

The journey to a successful Initial Public Offering (IPO) requires preparation, strategic planning, and a deep understanding of regulatory requirements. Among the many steps in this journey is filing SEC Form S-1.

In this article, we'll cover everything you need to know about filing the S-1 so you can ensure your company is well-prepared for this momentous step.

What Is The SEC Form S-1?

The Securities and Exchange Commission (SEC) Form S-1 is the initial registration form for private companies aiming to go public in the United States. This document provides investors detailed information about your business operations, financial condition, management team, and risk factors.

Once the SEC deems your S-1 "effective," you can start selling stock to the public.

S-1 Form Requirements

The S-1 form demands a thorough disclosure of your operations and financial position. The first and most detailed part of Form S-1 is the prospectus. So let's delve into what the prospectus requires.

Information Required In Prospectus

1. Summary. This section provides a detailed overview of company operations, products, and services. It may include details on the size of your customer base, when the company was founded, where it operates, how it makes money currently, and market opportunities the leadership team has identified.
2. Use of proceeds. In this section, you estimate how much the company will net from the IPO and how you plan to use the money you raise. This description can be broad or very specific, such as if you intend to use the proceeds to pay off debt or acquire other companies or technologies.
3. Determination of offering price. This section details the number of shares being offered, the offering share price, and your offering price methodology.
4. Dilution. This section explains the issuer’s current capitalization and share class structure.
5. Selling security holders. This section discloses the names of stockholders selling their shares, the number of shares that may be offered for resale, and the number of shares of common stock owned by each selling shareholder after the IPO.
6. Plan of distribution. If the securities will be offered through underwriters, this section gives the names of the principal underwriters and the amounts underwritten. It also identifies any underwriter with a material relationship with the company and the nature of that relationship.
7. Interests of named experts and counsel. This section provides the name of the law firm that approved the legality of your registration statement.
8. Information with respect to the registrant. This section is the meatiest part of the prospectus. It describes the business, any property it owns, legal proceedings it's involved in, audited financial statements as of the end of the most recent fiscal year, supplementary financial information, management's analysis of the financial condition and results of operations, disagreements with accountants on accounting matters and financial disclosure requirements, a list of risks that could potentially impact the company's business or stock price, a list of all members of the board of directors and officers, information on executive compensation, and transactions with related parties.

Everything on the S-1 must be accurate and complete at the time of filing. If any material changes have occurred since you issued the financial statements, you must disclose those changes in the Form S-1. If the SEC discovers you omitted critical information, it can levy penalties against the company and its management.

Information Not Required in Prospectus

Part II of Form S-1 is for other items not required in the investment prospectus. This includes indemnification of directors and officers, recent sales of unregistered securities, and other expenses of issuance and distribution.

While the official Form S-1 from the SEC is only 14 pages long, completing it requires gathering information from various sources, including your pre-IPO accounting software, underwriters, and independent auditors. In fact, the Office of Management and Budget estimates the average filer spends 632.42 hours filling out the form and all related attachments and supplemental information.

Filing the S-1 Form

Once completed, you can file Form S-1 with the SEC using its Electronic Data Gathering, Analysis, and Retrieval system, also known as the EDGAR filing system.

You first need to apply for access to the EDGAR system. You can create a Form ID on the EDGAR website and submit it for authorization to the SEC. Once you're accepted, you will receive a unique Central Index Key (CIK) via e-mail.

You can then return to the EDGAR site and use your CIK and a passphrase to create your EDGAR access codes. Then, you can start using the system to begin electronically filing.

The online system is available from 6:00 a.m. to 10:00 p.m. Eastern Time, Monday through Friday, except for federal holidays.

You will also need to pay a registration fee when you submit Form S-1. The fee varies depending on the number of securities you want to register, the proposed maximum offering price per unit, and the proposed maximum aggregate offering price.

Next Steps After The S-1 Filing

After you submit the Form S-1, the SEC will review your initial registration statement and respond with detailed comments—usually within 30 days. Use these comments to complete Form S-1/A, which includes amendments to your original submission.

The Securities and Exchange Commission may submit multiple rounds of comments, and you may have to make several rounds of revisions before the SEC deems your Form S-1 effective.

Use this time to:

• Prepare for the IPO roadshow, where you'll present your company to potential investors
• Finalize your due diligence
• Prepare your offering documents
• Meet with analysts
• Monitor public communication
• Ensure you're ready for public company reporting requirements, such as filing Form 10-K
• Refine and implement your corporate governance policies

The good news? If you raise more capital—potentially through a secondary offering after your IPO occurs, you won’t need to complete a new Form S-1. Instead, you’ll file Form S-3, which is shorter and usually goes through a quicker SEC review process.

Completing your S-1 registration statement is a critical step in your IPO journey. By understanding the form's requirements and meticulously preparing your documentation, you can confidently navigate this process. Remember, the goal of the S-1 filing is not just regulatory compliance but to lay a foundation of transparency and trust with your future investors.