registration

Registration

1. The process by which a company files required documents with the Securities and Exchange Commission detailing the particulars of a proposed public offering. A company issuing shares must reveal essential facts and detailed information about its business during the registration process, including a business and asset description, a description of the security being offered and the details of that offering, a description and names of the company's management, and the company's financial statements, which have been certified by an accountant working independently of the company.

2. The process by which securities brokers or dealers become legally entitled to sell securities. To have the authority to sell securities, a broker or dealer must file forms and be granted registration with the SEC, must already be a member, or must become a member of a self-regulatory organization such as the NASD, be registered with the state or states in which he or she intends to sell securities if such state laws require him or her to do so, and finally, be or become a member of the Security Investor Protection Corporation.

Investopedia Commentary

1. Companies must now file the required information electronically, so it can be accessible to the public more quickly. Companies must also file a prospectus, which provides a summary of the company's share offering including the size, what the funds raised will be used for, and contact information for the company. Some securities are exempt from the SEC's registration process. These include limited and private offerings and municipal, state and federal security offerings.

2. Not every person working for a securities dealer or broker or an investment bank must be registered in order to conduct business, but the requirements are very stringent, by necessity. If you're thinking about selling securities or working for an investment bank as a career, it's best to check with the relevant authorities in your jurisdiction to ensure that you have fully complied with all relevant laws governing the sale of securities.

Related Links

IPO Basics Tutorial
Don't Forget To Read The Prospectus!
Brokerage Functions: Underwriting And Agency Roles

See also: Broker-Dealer, Initial Public Offering - IPO, New Issue, Offering Memorandum, Prospectus, Securities Investor Protection Corporation - SIPC, Self-Regulatory Organization - SRO, Shelf Registration, Subsequent Offering, Underwriting

registration

The preparation of a security issue for public sale. For registration, the issuer hires an underwriting firm to prepare a registration statement that is submitted to the SEC or to a state authority. As part of this process, an investment banker brings in a public accounting firm to audit the issuer's financial condition. See also cooling-off period, gun jumping, piggyback registration.