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Preparing to go public
consolidated subsidiaries exceed 25%
of consolidated net assets as of the
end of the most recently completed
fiscal year. For purposes of this test,
restricted net assets of consolidated
subsidiaries are the amount of the
company’s proportionate share of net
assets of consolidated subsidiaries
(after intercompany eliminations),
which, as of the end of the most recent
fiscal year, may not be transferred to
the parent company by subsidiaries
in the form of loans, advances or cash
dividends without the consent of a
third party (e.g., lender, regulatory
agency, foreign government).
• Schedule II—Valuation and Qualifying
Accounts must be filed in support
of valuation and qualifying accounts
(e.g., allowance for doubtful accounts,
allowance for inventory obsolescence)
included in each balance sheet.
• Schedule III—Real Estate and
Accumulated Depreciation must be
filed for real estate held by companies
with a substantial portion of their
business involving acquiring and
holding investment real estate,
interests in real estate or interests in
other companies a substantial portion
of whose business is acquiring and
holding real estate or interests in real
estate for investment. Real estate used
in the business is excluded from the
schedule.
• Schedule IV—Mortgage Loans on
Real Estate must be filed by certain
companies for investments in mortgage
loans on real estate.
• Schedule V—Supplemental
Information Concerning Property-
Casualty Insurance Operations
must be filed when the company, its
subsidiaries or 50%-or-less owned
investees accounted for under the
equity method have liabilities for
property-casualty (P/C) insurance
claims. The schedule may be omitted
if reserves for unpaid P/C claims
and claims adjustment expenses of
the company and its consolidated
subsidiaries, its unconsolidated
subsidiaries and its 50%-or-less
owned equity method investees did
not, in aggregate, exceed one-half
of common stockholders’ equity of
the company and its consolidated
subsidiaries as of the beginning of the
fiscal year. For purposes of this test
only, the proportionate share of the
company and its other subsidiaries
in the reserves for unpaid claims
and claim adjustment expenses of
50%-or-less owned equity method
investees taken in the aggregate after
intercompany eliminations shall be
taken into account.
Companies in specific industries,
including insurance, may have additional
supplemental information requirements
that vary from those listed above. The
schedule information may be provided
separately or in the notes to the audited
financial statements.
Industry guides: Item 801 of Regulation
S-K sets out five industry “guides”
requiring enhanced disclosure of financial
and operational metrics for companies in
certain industries:
• Guide 3—Statistical Disclosure by
Bank Holding Companies;
• Guide 4—Prospectuses Relating to
Interests in Oil and Gas Programs;
• Guide 5—Preparation of Registration
Statements Relating to Interests in Real
Estate Limited Partnerships;
• Guide 6—Disclosure Concerning
Unpaid Claims and Claim Adjustment
Expenses of Property-Casualty
Insurance Underwriters; and
• Guide 7—Description of Property by
Issuers Engaged or to Be Engaged in
Significant Mining Operations.
Guidance for disclosures for companies
with oil and gas operations is provided in
Item 1200 of Regulation S-K.
Smaller reporting companies: Smaller
reporting companies, as defined by Item
10(f)(1) of Regulation S-K, may be eligible
for scaled reporting requirements. These
scaled requirements streamline and
simplify the disclosure requirements to
make it easier and less costly for smaller
reporting companies to comply. Under the
rules, a company qualifies as a “smaller
reporting company” if it:
• has a public common equity float of
less than $75 million; or
• has no public float (e.g., companies
with no common equity outstanding or
no market price for their outstanding
common equity) and has annual
revenues of $50 million or less, upon
entering the system; or
• in the case of an initial registration
statement, had a public float of less
than $75 million as of a date within
30 days of filing its initial registration
statement.
In the case of a company filing an
initial registration statement, the public
float is computed by multiplying the
aggregate worldwide number of common
equity shares held by nonaffiliates before
the offering plus the number of common
shares being offered in a Securities Act
registration statement by the estimated
public offering price of the common equity
shares.
If smaller reporting company
status is achieved, the registration
statement may comply with the SEC’s
scaled disclosure system. The scaled
disclosure requirements are integrated
into Regulation S-X (Article 8 for
financial statement requirements) and
Regulation S-K (for nonfinancial statement
disclosure requirements). A few of the
key differences in financial statement
requirements are as follows:
• Audited annual financial statements—
These include statements of income,
cash flows, changes in stockholders’
equity and comprehensive income for
the past two years, as contrasted to
three years for large companies. The
balance sheet requirement is the same.
• Financial statements for significant
acquisitions—Rule 8-04 of Regulation
S-X requires two years of financial
statements for a business acquired
by a smaller reporting company if
the acquisition is greater than 50%
significant. Under Rule 3-05, a third year
is required if the acquisition is greater
than 50% significant and the acquired
business had revenues of at least $50
million in its most recent fiscal year.
• Audited financial statements
for significant equity method
investments—Article 8 does not
require the filing of separate financial
statements of investees as would
be required under Rule 3-09, but
summarized financial information
must be disclosed.
NYSE IPO Guide
21