Form 3

Definition

The term Form 3 refers to a report filed with the Securities and Exchange Commission when an individual first becomes a company insider.  Reporting entities have ten days after the event to file this report with the Securities and Exchange Commission.

Explanation

Under Section 12 of the Securities Exchange Act of 1934, individuals are required to file a Form 3 ten days after becoming a company insider, regardless of their equity position.  Generally, company insiders include directors, officers of the company, and owners of more than ten percent of the company's registered equity securities.

Form 3, also known as the Initial Statement of Beneficial Ownership of Securities, is a two page document that is divided into two sections.  The first deals with non-derivative securities owned by the insider.  This section of the report captures information such as:

  • Name and Address of Reporting Person
  • Relationship to Issuer (Director, Officer, 10% Owner)
  • Title of Security
  • Amount of Securities Beneficially Owned
  • Ownership Form (Direct or Indirect)
  • Nature of any Indirect Ownership (Self, Spouse, Trustee,  Corporation)

The second section deals with derivative securities that are beneficially owned.  This would include puts, calls, warrants, options, as well as convertible securities.  This section of the report captures information such as:

  • Title of Derivative
  • Exercise Dates
  • Derivative Securities (Quantity and  Conversion or Exercise Price)
  • Transaction Dates
  • Derivative Securities Acquired or Disposed of (Quantity and Price)
  • Ownership Form (Direct or Indirect)
  • Nature of any Indirect Ownership (Self, Spouse, Trustee,  Corporation)

Related Terms

Form 10-K, Form 10-Q, annual report, proxy statementForm 8-K, Form 4, Form 5, Form 1099-B