A company’s in-house counsel should have a solid understanding of Rule 424 under the Securities Act of 1933 (the Securities Act). There are different types of Rule 424(b) prospectuses and prospectus supplements that might have to be filed in connection with a registered securities offering.

A prospectus or prospectus supplement is used to market a registered securities offering to potential investors. Public companies at all stages of growth may have to file a Rule 424 prospectus at some point.

In connection with an initial public offering (IPO), a company will file a registration statement on a Form S-1. If it is a foreign company seeking to list on a U.S. stock exchange, it will use a Form F-1 registration statement. A company will typically file a number of amendments to the registration statement and go through a couple rounds of SEC comments. After the company clears SEC comments, the SEC will declare the registration statement effective. The company may file a preliminary IPO prospectus for distributing to potential investors in order to market the offering. Rule 424(a) governs the requirements for a preliminary prospectus that is filed before the registration statement is declared effective by the SEC. A preliminary prospectus is sometimes referred to as a pre-effective prospectus.

Once the S-1 or F-1 registration statement is declared effective by the SEC, the company will file a final IPO prospectus pursuant to Rule 424(b). Typically, this final IPO prospectus will be governed by Rule 424(b)(4). A final prospectus is sometimes referred to as a post-effective prospectus and typically contains pricing information.

There are other types of 424(b) prospectuses or prospectus supplements, which are also given to investors after the registration statement is effective. If a company wants to do a primary shelf offering, it may file a 424(b)(2) prospectus supplement. A shelf offering allows a company to make multiple public offerings of securities in reliance on the same base prospectus.

A 424(b)(7) prospectus supplement can be filed by well-known seasoned issuers (WKSIs). A WKSI is defined as a company that has been publicly listed for at least 12 months and that has a public float of at least $700 million. The Rule 424(b)(7) prospectus adds information about selling securityholders, or holders of a company’s unregistered securities that are getting their securities registered pursuant to the prospectus supplement. The selling securityholders may have obtained unregistered securities of the company through a private placement transaction or other exemption from registration.

Other commonly used subsections for prospectus supplement filings include 424(b)(3) and 424(b)(5). All prospectuses and prospectus supplements filed with the SEC must indicate the relevant Rule 424(b) subsection in the top right corner.

Closely related to Rule 424 are Rules 430A and 430B under the Securities Act. Rules 430A and 430B are complicated, but in simple terms they can be relied upon to leave out certain information about the offering. Rule 430B allows companies to omit certain pieces of information from their base prospectus filing. The information generally has to be provided in a prospectus supplement filed under Rule 424(b).