The Legal Process of Ipo

In order to issue public securities offerings, the issuing corporation has to prepare preliminary prospectus at first to complete the Form S-1, which is the required securities registration statement, and then submit these file to U.S Securities and Exchange Commission (SEC). Within the preliminary prospectus, the corporation is required to provide written document to declare its current performance, including existing offerings, shareholders, historical financial situations, and risk evaluations, so that facilitating investors to make advisable decisions on their securities investment. Sometimes the preliminary prospectus is also called the “red herring” prospectus the information in the document is incomplete and free to revise. Without the approval of issuance from SEC after the registration statement (Form S-1) filed with it, the issuing corporation and stockholders cannot sell or buy in these securities in any places in the U.S. After the SEC receive the submission of statement, its Division of Corporate Finance checked the clarity, credibility and adequateness of the information and then implement the S-1/A, which is the amendment to the Form S-1, commenting on the registration statement that the company hands out. The period between the issuing corporation’s initial submission of registration statement and the SEC staff’s final claim of the statement’s effectiveness is referred to “waiting period”, playing a role of protecting investors from aggressive promotion of offerings through limiting to release information on the statement. Investors who are interested in participating securities transaction cannot place orders in accordance with the preliminary prospects and the investment banks cannot manage securities transaction until the SEC has passed the registration statement and the final prospects that the information delivered to investors has already clearly embodies offering prices and detailed declaration of offerings.