On January 26, the Securities and Exchange Commission’s Division of Corporation Finance issued updated Compliance and Disclosure Interpretations (CDI) of rules adopted under the Securities Act of 1933, as amended.  

The CDI includes an interpretation relevant to issuers that are “well-known seasoned issuers” (WKSI) but are in danger of losing their WKSI status due to a decline in stock price. Issuers that meet the WKSI requirements can offer securities pursuant to an automatic shelf registration statement which allows for an unlimited amount of securities to be registered on a “shelf” basis and allows an issuer to pay SEC filing fees on a delayed basis only at the time securities are offered off the “shelf”. Question 198.06 of the CDI provides that an issuer with WKSI status that is offering securities pursuant to an automatic shelf registration statement filed with the SEC, but that will no longer be a WKSI at the time it files a Form 10-K, may subsequently continue to offer and sell securities under the automatic shelf registration statement,but only if, prior to filing the Form 10-K, the issuer amends the automatic shelf registration statement so that it conforms to the requirements that apply to a Form S-3 filed in reliance on General Instruction I.B.1 or I.B.2 of Form S-3. Specifically, the following conditions must be satisfied:  

  • Prior to filing the Form 10-K, the issuer must file a post-effective amendment to the automatic shelf registration statement to register a specific amount of securities and to pay the associated SEC filing fee.
  • The prospectus included in the post-effective amendment to the automatic shelf registration statement may not omit information in reliance on provisions of Rule 430B of the Securities Act that are available only to automatic shelf registration statements and instead must contain all information required to be included in a Form S-3 filed in reliance on General Instruction I.B.1 or I.B.2.
  • The issuer must remain eligible to use Form S-3 in reliance on General Instruction I.B.1 or I.B.2 at the time of the filing of the Form 10-K.  

Promptly after the Form 10-K is filed, the issuer must file either a post-effective amendment or a new Form S-3 registration statement to convert the Form S-3 to a non-automatic shelf registration statement. Pending the SEC’s declaring the new filing effective, the issuer may continue to offer and sell securities using the amended automatic shelf registration statement.  

http://www.sec.gov/divisions/corpfin/guidance/securitiesactrules-interps.htm