Since December 1, 2005, issuers qualifying as well known seasoned issuers (WKSIs) have been able to file shelf registration statements with the SEC on Form S-3 or F-3 which become effective immediately upon filing. In addition, a primary offering by an issuer can now be made under such a shelf registration statement immediately following its effectiveness. This method of selling securities may well become the primary means by which large issuers raise both debt and equity capital.

As a part of its Securities Offering Reform regulations, the SEC substantially streamlined its procedures for shelf registrations under Rule 415. WKSIs are the primary beneficiaries of the changes, as they alone may take advantage of the new “automatic shelf registration” procedures. A WKSI is an issuer that is eligible to use Form S-3 or F-3 and either:

• has a worldwide market value of common equity held by non-affiliates of at least $700 million; or
• has issued at least $1 billion in registered non-convertible securities (other than common equity) in primary offerings for cash and registers only such non-convertible securities (unless its public float is at least $75 million).

The new regulations have not altered many of the standard practices relating to “universal shelf registration statements.” A registration statement, containing a “base prospectus,” is filed covering one or more different types of securities that the issuer may offer from time to time after the effectiveness of the registration statement. Each time an actual offering is made (and securities are “taken down from the shelf”), a “prospectus supplement” describing the terms of the securities and the offering is prepared and filed with the SEC under Rule 424. The base prospectus and the prospectus supplement are distributed together and function as a single disclosure document. Since the registration statement is already effective at the time of the offering and the prospectus supplement does not need to be declared effective, an offering of securities off the shelf can be completely very quickly. This process has now been enhanced, for WKSIs, by the adoption of the automatic shelf registration process.

Numerous other changes to the SEC’s shelf registration procedures also became effective on December 1, 2005. Many of these are not limited to WKSIs. The new procedures are designed in large part to streamline the registration process and to encourage issuers to raise capital through registered offerings rather than privately.

The SEC’s Securities Offering Reform regulations are available here.

For further information, please contact William T. Manierre at (415) 774-3283.