Registration by Coordination

Registration by coordination is the most commonly used method when an issuer is simultaneously registering securities at both the federal and state level.

Eligibility

Unlike registration by filing, coordination has no financial tests or operating history requirements:

  • Any security for which a registration statement has been filed under the Securities Act of 1933 (SA) in connection with the same offering may be registered by coordination
  • The federal and state registration statements need not be filed simultaneously or become effective simultaneously
  • This is the broadest eligibility of the two methods that require concurrent federal registration

Filing Requirements

The filing requirements are moderate (more than filing, less than qualification):

  • Three copies of the latest form of prospectus filed under the SA of 1933
  • If the Administrator requires: articles of incorporation, by-laws, underwriting agreements, indentures, specimen of the security
  • If the Administrator requests: any other information or documents filed with the Securities and Exchange Commission (SEC)
  • An undertaking to forward all future amendments to the federal prospectus promptly (no later than the first business day after they are forwarded to or filed with the SEC)
  • Information specified in Section 305(c) and consent to service of process

Effective Date

Registration by coordination becomes effective automatically at the moment the federal registration statement becomes effective if ALL three conditions are satisfied:

  1. No stop order in effect and no proceeding pending under Section 306
  2. The registration statement has been on file with the Administrator for at least 10 days
  3. A statement of maximum and minimum proposed offering prices and maximum underwriting discounts/commissions has been on file for 2 full business days (or a shorter period the Administrator permits), and the offering is made within those limitations

Important details:

  • The Administrator may waive either or both of conditions (2) and (3)
  • If the federal registration becomes effective before state conditions are met, the state registration becomes effective as soon as all conditions are satisfied

Exam Tip: Gotchas

Registration by coordination has a 10-DAY waiting period (vs. 5 business days for filing). The price amendment must be on file for 2 FULL BUSINESS DAYS. These are the most frequently tested time periods for coordination. Remember: the Administrator can waive both waiting periods.

Price Amendment and Notification

After the federal registration becomes effective, the registrant must handle price amendment requirements:

  • Promptly notify the Administrator by telephone or telegram of the federal effective date and content of the price amendment
  • Promptly file a post-effective amendment containing the price amendment information
  • Price amendment = the final federal amendment with: offering price, underwriting/selling discounts, amount of proceeds, conversion rates, call prices

Failure to provide notification triggers serious consequences:

  • The Administrator may enter a stop order without notice or hearing, retroactively denying or suspending effectiveness
  • However, if the registrant proves compliance, the stop order is void as of the time of its entry

Exam Tip: Gotchas

If the registrant fails to notify the Administrator of the federal effective date, the Administrator can enter a stop order WITHOUT the normal due process requirements (no prior notice, no hearing). This is an exception to the general rule that stop orders require notice and an opportunity for a hearing.