Registration By Notification

Pellamere Ceramics has filed a registration statement by qualification in State C. Its chief financial officer asks the underwriter when the firm may begin accepting money, assuming no proceeding is pending. Under the Uniform Securities Act, a registration by qualification becomes effective:

1. A.automatically at noon on the tenth day after filing if no stop order is pendingNo such automatic period governs qualification. The Administrator issues an order.
2. B.automatically at the moment the SEC declares the federal registration statement effectiveThat describes coordination, which requires a concurrent federal filing that a qualification offering does not have.
3. C.as soon as the issuer certifies to the Administrator that the prospectus is completeAn issuer self-certification has no effect on the effective date.
4. D.when the Administrator so ordersCorrect. Qualification takes effect on the order of the Administrator.

Why: Qualification is the method used when there is no concurrent federal registration to ride on, and it is the one method whose effective date the Administrator controls directly. The registration becomes effective when the Administrator so orders. Coordination becomes effective automatically at the moment the federal registration statement becomes effective, and notification runs on a waiting period, but qualification waits for the order.

Three State F offerings are being planned. Netherby Hydro has an SEC registration statement on file under the Securities Act of 1933 for a nationwide offering. Culverhay Brewing, incorporated and operating solely in State F, will sell exclusively to State F residents and will make no federal filing. Ravenhill Mills, a start-up incorporated last year with no earnings history, will also sell exclusively to State F residents with no federal filing. Which statement about their State F registration methods is correct?

1. A.All three may register by coordination, because coordination is available to any issuer that files in a stateCoordination requires a Securities Act of 1933 registration statement filed for the same offering.
2. B.Netherby Hydro must register by qualification, because a nationwide offering is too large for coordinationThere is no size ceiling on coordination. A nationwide federally registered offering is the classic coordination case.
3. C.Netherby Hydro may register by coordination, and Ravenhill Mills must register by qualificationCorrect. A concurrent federal filing unlocks coordination, and a start-up with no earnings history has only qualification available.
4. D.Culverhay Brewing and Ravenhill Mills may register by notification, because purely intrastate offerings use the simplest methodNotification is keyed to issuer seasoning and financial standards, not to the geography of the offering.

Why: Coordination is available only where a Securities Act of 1933 registration statement has been filed for the same offering, so Netherby Hydro may use it and the other two may not. Notification depends on an issuer meeting seasoning and earnings standards, which a start-up incorporated last year cannot meet. Qualification is the residual method available for any security, so both of the intrastate issuers can register that way, and Ravenhill Mills must.