Series 66: Registration By Qualification

Registration by Qualification

When an issuer registers a security by qualification, it means that the issuer is starting from scratch in proving that their security meets the basic regulatory requirements to protect the public. This means that they need to provide a registration statement to their state securities Administrator containing a boatload of information. This is the most laborious type of state registration and is generally used for intrastate securities, which are securities that will be sold in only one state.

A registration by qualification requires:

• • All the basics about the company (name, address, state of organization, etc.)
• • The general nature of the business, including key assets
• • A summary of the business environment in which the company operates
• • All the relevant details about the security being issued (issue price, number of shares, face value of stock, maturity or redemption dates of debt securities, etc.)
• • The total amount of money to be collected through the offering
• • The total value of debt and stock already in existence for the issuer
• • A company balance sheet that is no more than four months old
• • The three previous years of annual income statements (profit and loss statements)
• • A breakdown of each