Securities issuance and trading are regulated by the Securities Act of 1933 and the Securities Exchange Act of 1934 in American law. Entities are required to register their securities with the Securities and Exchange Commission (SEC), or, in certain situations are exempt from the registration obligations, such as under Regulation D, which is widely used for private offerings. For public offerings, issuers are required to file a complete registration statement containing a prospectus that provides information regarding the issuer’s financial and operating activities, to promote transparency and protect investors’ interests. 

Throughout these corporate governance processes, articles of incorporation and company bylaws will require stock issuance to be made in accordance with these documents, while directors must act in the best interest of the company and shareholders. For private offerings, issuers may rely on an exemption under Regulation D or Regulation A, or provisions established in the JOBS Act, which also includes crowdfunding, allowing issuers to seek the necessary capital without full registration with the SEC. Public or private issuance will also prohibit the issuer from making false and misleading representations regarding material facts because doing so would cause serious consequences, including SEC enforcement action, investor initiated litigation against the issuer, or even criminal prosecution. 

The SEC’s ongoing reporting requirements, which includes filing quarterly (10-Q) and annual (10-K) reports, proxy statements, disclosures of material events, and insider trading rules that restrict trading on non-public, material information, apply to public companies. The business must also follow SEC Rule 701 and IRS tax regulations if it grants stock options to its employees. In addition to SEC regulations, international stock issuances must abide by Regulation S and the securities laws of the foreign investor’s nation.