Quick Answer
Registration by filing (notification) is the simplest procedure of the three state methods, but it has the strictest eligibility rules. Two routes exist: a seasoned-issuer route with extensive financial and reporting tests, and a separate route for open-end funds and unit investment trusts with prior in-state qualification. Each route has its own effective-date rule.
Registration by filing rewards issuers who have already proven themselves to federal regulators. The tradeoff runs in the opposite direction from qualification: the harder a company is to qualify for this method, the less paperwork it has to file once it does.
What Is Registration by Filing?
Registration by filing (also called registration by notification) under the Uniform Securities Act (USA) is designed for large, established issuers that already have extensive Securities and Exchange Commission (SEC) reporting histories. The logic is simple: if a company has been publicly reporting to the SEC for years and meets strict financial tests, the state does not need to conduct its own detailed review.
Who Can Use Registration by Filing?
Registration by filing is available by two routes, both of which require registering the securities federally as well.
The Seasoned-Issuer Route
The issuer must have a substantial operating history, an established SEC reporting record, and strong financials. Because the issuer is already well known to federal regulators and the public markets, the state relies on that federal record rather than conducting its own detailed review. Every condition below must be satisfied at once, not as alternatives:
| Requirement | Threshold |
|---|---|
| Organization | Organized under U.S. or state law, or has a U.S. agent for service of process |
| Operating history | Actively engaged in U.S. business operations for at least 36 consecutive months before the federal filing |
| SEC reporting | Registered a class of equity securities for exchange listing or over-the-counter reporting, held by 500 or more persons of record |
| Net worth (Option A) | Total net worth of $4,000,000 |
| Net worth (Option B) | Total net worth of $2,000,000 and net pretax income from operations for at least 2 of the 3 preceding fiscal years |
| Public float | Not less than 400,000 units of the registered class held by the public, excluding officers, directors, underwriters, and 10%+ holders |
| Insider options | Outstanding warrants and options held by underwriters, executive officers, and directors do not exceed 10% of the total shares to be outstanding after the offering |
| SEC compliance | Subject to ongoing federal periodic and proxy reporting requirements, and has filed all required material under them for at least 36 calendar months before the federal filing |
| Market makers | At least 4 market makers for the registered class during at least 30 days of the 3 months preceding the offering |
| Underwriter participation | Each underwriter and broker-dealer offering in the state is a member of, or subject to the fair-practice rules of, a national securities association; underwriters contracted to purchase in a principal capacity |
| Underwriting compensation | Aggregate commissions or discounts do not exceed 10% of the aggregate public offering price |
| No defaults | Neither the issuer nor its subsidiaries have failed to pay preferred dividends or a sinking fund installment, defaulted on debt, or defaulted on a material long-term lease since the end of the last fiscal year |
| Minimum share price | Equity securities are priced at not less than $5 per share |
The Open-End Fund and UIT Route
This second route covers open-end investment companies and unit investment trusts. It has no operating-history or financial tests. It turns instead on a prior-qualification test with two alternative branches, plus compliance with those prior registrations and no material change since:
- Either the applicant itself qualified the sale of its securities in the state (by qualification, coordination, or this same filing route) within the preceding 24 months
- Or, for a unit investment trust only, its sponsor previously registered a substantially identical UIT in the state. This branch has no 24-month window: the 24 months applies to the applicant's own prior qualification, not to the sponsor's
"No material change since" means no material change in any of these four areas:
| Category | What Must Stay the Same |
|---|---|
| Terms of securities | The terms of the securities being offered |
| Selling method | The method of selling or distributing the securities |
| Investment practices | The fund's investment practices, objectives, or restrictions |
| Terms of sale | The terms of sale, including net proceeds to the applicant and the method of computing the selling price |
Exam Tip: Gotchas
Do not apply the 24-month clock to the sponsor branch. A question testing a UIT whose sponsor already registered a substantially identical trust is testing the branch with no time limit at all; only the applicant's own prior qualification carries the 24-month window.
The key idea to remember: registration by filing has the most stringent eligibility requirements but the simplest filing procedure. "Easy to file" is not the same as "easy to qualify." In practice, few issuers use this method, especially since exchange-listed securities are now federal covered securities and are exempt from state registration altogether.
What Must Be Filed for Registration by Filing?
A registration statement under this method must include, in addition to the common information required of every method (see Provisions Applicable to All Methods) and the consent to service of process:
- A statement demonstrating eligibility for registration by filing
- The name, address, and form of organization of the issuer
- For a non-issuer distribution: the seller's name, address, holdings of the issuer's securities, and reasons for making the offering
- A description of the security being registered
- A copy of the latest prospectus filed with the federal registration statement
When Does Registration by Filing Become Effective?
The two routes have different effectiveness rules. Match the rule to the route.
Seasoned-issuer route. The registration becomes effective concurrently with the federal registration statement, provided the required information and documents have been on file for at least 5 business days (or a shorter period the Administrator allows), the registration fee is paid before federal effectiveness, and no stop order or proceeding is pending. If the federal registration becomes effective before the state conditions are satisfied, the state registration becomes effective when all conditions are met.
Open-end investment company and unit investment trust route. Once the required information and documents are filed and the fee is paid, the registration becomes effective on the business day of filing, or when the existing registration expires, whichever happens last, unless the Administrator by order specifies an earlier date, and provided no stop order or proceeding is pending. There is no 5-business-day waiting period and no tie to federal effectiveness on this route.
On the seasoned-issuer route, the registrant must promptly notify the Administrator by telephone or telegram of the federal effective date and the content of the price amendment, if any, and must promptly file a post-effective amendment containing that price-amendment information. This mirrors the notification and post-effective amendment duties on the coordination route.
Exam Tip: Gotchas
- The 5-business-day wait and the concurrent-with-federal rule belong to the seasoned-issuer route only. A mutual fund renewing its registration does not wait 5 business days and does not key off federal effectiveness: it takes effect on the business day of filing or when its existing registration runs out, whichever is later. Read which route the question is describing before reaching for the number.
What Should You Check on Exam Day?
- Decide which route a fact pattern describes before applying a number: seasoned-issuer thresholds and timing do not apply to the open-end fund and UIT route, and vice versa.
- Match the effective-date rule to the route: concurrent with federal effectiveness for seasoned issuers, versus filing date or prior-registration expiration (whichever is last) for funds and UITs.
- Remember the fund and UIT route has no financial or operating-history tests, only the prior-qualification test.
- Recall that few issuers actually use this method today, since exchange-listed securities are now federal covered securities.