A. Form S-8 (“Form S-8”) is a short-form registration statement under the Securities Act of 1933, as amended (the “Securities Act”). Most companies use Form S-1 in going public transactions when conducting a direct public or initial public offering (“IPO”).
Form S-1 registration statements require complete and comprehensive disclosures of the issuer’s business, finances and management functions as a prospectus for investors in an initial public offering. It’s also the most time-consuming registration statement to prepare because of the expansive disclosures required.
Subsequent securities offerings may be registered using
a Form S-3 registration statement if the issuer meets certain requirements. Form S-1 can be used by issuers who filed their reports with the SEC in a timely manner for at least three years if they meet certain requirements.
Form S-8 can also be used by issuers who are subject to the SEC’s reporting requirements. Under most circumstances, Form S-8 registration statements require miniminal disclosure in comparison to Form S-1 and S-3.
Q. Can all Companies register securities on a Form S-8 registration statement?
A. Form S-8 registration statements can only be used by companies that file reports under Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”). In order to register securities on Form S-8, the Company must have filed all reports and other materials required to be filed by Section 13 or Section 15(d) of the Exchange Act during the preceding 12 months or for such shorter period that it was required to file such reports and materials.
Q. What are the benefits of filing a registration statement on Form S-8?
A. Unlike registration statements on Form S-1 or Form S-3, a registration statement on Form S-8 is automatically effective upon filing and the shares registered for non-affiliates may be issued without a restrictive legend.
Q. Who can receive securities registered on a Form S-8 registration statement?
A. Form S-8 may be used to register securities offered to employees and consultants under benefit plans.
Q. What are the requirements for registration of securities on Form S-8?
A. The requirements for use of S-8 are as follows:
♦ the recipient of shares registered on Form S-8 must be a natural person and not a corporate entity;
♦ the shares registered on Form S-8 Shares may only be used to compensate a person for bona fide services provided to the issuer;
♦ the services provided must not be in connection with a capital raising transaction, reverse merger or promotion of an issuer’s securities; and
♦ the agreement for the services provided must be in writing.
Q. Can shell companies register securities on Form S-8?
A. No, company that has been a shell company in the 60 days prior to the filing of the Form S-8 registration statement cannot register securities on Form S-8.
Q. What types of service providers are prohibited from being compensated with securities registered on Form S-8?
A. Securities covered by a Form S-8 registration statement cannot be used to compensation for the following services:
♦ shareholder communications services (i.e. preparation of press releases or other publicly disseminated information regarding the issuer);
♦ arranging for or effecting merger transactions which cause a private company to become publicly traded;
♦ capital raising services;
♦ Internet or other newsletter writers who “tout” the issuer’s securities, recommend the issuer’s securities or who otherwise simply discuss the issuer’s business;
♦ spam email services; and
♦ any other service which relates to the publishing or dissemination of information that can reasonably be expected to influence the price of the issuer’s securities.
Q. Can shares registered on Form S-8 be used to repay loans made to the issuer?
A. No, using securities registered on Form S-8 to repay loans to the issuer is prohibited.
Q. Are shares registered on Form S-8 that issued to a Company’s officers and directors restricted securities?
A. Shares registered on Form S-8 that are issued to officers, directors or other affiliates are unrestricted BUT subject to the volume limitations of Rule 144 imposed upon control securities.