The close of 2008 marks the third anniversary of the Securities and Exchange Commission’s Securities Offering Reform rules, which became effective Dec. 1, 2005. Under these rules, certain shelf registration statements were limited to a three-year life span. Accordingly, many shelf registration statements that became effective prior to Dec. 1, 2005 (regardless of the date the registration statement was declared effective) will expire on Dec. 1, 2008. In addition, automatic shelf registration statements (ASRs) filed by Well Known Seasoned Issuers (WKSIs) in late 2005 and early 2006 in response to the Securities Offering Reform rules will soon expire.
Securities Act Rule 415(a)(5) provides that shelf registration statements may only be used for three years after their initial effective date. Guidance issued by the SEC staff further provides that certain shelf registration statements that became effective prior to Dec. 1, 2005 will expire on Dec. 1, 2008. Shelf registration statements that became effective after Dec. 1, 2005 will expire on the third anniversary of their effective date.
The three-year expiration provision applies only to the following types of shelf registration statements:
- ASRs filed by WKSIs for any type of securities offering;
- Registration statements for offerings which will be commenced promptly, will be made on a continuous basis and may continue for a period in excess of 30 days from the date of initial effectiveness filed pursuant to Rule 415(a)(1)(ix); and
- Registration statements on Form S-3 or Form F-3 for delayed or continuous offerings filed pursuant to Rule 415(a)(1)(x) (generally, “universal” or “unallocated” shelf registration statements).
The three-year expiration provision does not apply to the following types of registration statements, among others:
- Registration statements, other than ASRs, offering securities to be sold by selling stockholders filed pursuant to Rule 415(a)(1)(i);
- Registration statements, other than ASRs, offering securities to be offered pursuant to a dividend reinvestment plan or an employee benefit plan (including registration statements on Form S-8) filed pursuant to Rules 415(a)(1)(ii);
- Registration statements, other than ASRs, registering securities that are to be issued upon conversion of other outstanding options, warrants or rights filed pursuant to Rule 415(a)(1)(iii); and
- Registration statements, other than ASRs, registering securities that are to be issued in connection with business combination transactions filed pursuant to Rule 415(a)(1)(viii).
Issuers Should Review Their Registration Statements Now
Issuers with shelf registration statements expiring on Dec. 1, 2008 must file a new registration statement prior to Dec. 1, 2008 to continue the offering that was registered on the expiring registration statement. Otherwise, a shelf registration statement that became effective after Dec. 1, 2005 must be replaced prior to the third anniversary of its effective date. Issuers should review their shelf registration statements now and, if necessary, begin preparing any required replacement registration statements. Keep in mind that the replacement registration statements will necessitate involvement of the issuer’s independent auditor and outside counsel.
If the issuer is a WKSI, it can file an ASR to replace an expiring registration statement. The ASR will be automatically effective and can be used immediately. In light of the recent stock market decline, WKSIs should confirm their WKSI status under Rule 405 as of the date of the filing of the replacement ASR. If the issuer is not a WKSI, its replacement registration statement will be subject to SEC staff review, potentially creating a gap between the expiration of the expiring registration statement and the effectiveness of the replacement registration statement. However, Rule 415(a)(5) provides for a transition period of up to 180 days during which the expired registration statement may be used until the SEC staff declares the new registration statement effective. To take advantage of this transition period, the replacement registration statement must be filed prior to the expiration of the expiring registration statement.
Rule 415(a)(6) allows issuers to include on the new registration statement any unsold securities covered by the expiring registration statement. This is done by identifying on the bottom of the facing page of the new registration statement the amount of unsold securities that are included and any filing fee paid in connection with the unsold securities. Under Rule 457(p), the unused filing fee from the expiring registration statement may be carried forward to the new registration statement so long as the new registration statement is filed before the fifth anniversary of the initial filing date of the expiring registration statement.