On December 11, 2007, the SEC unanimously adopted changes that will provide smaller companies with faster and easier access to capital. Specifically, the SEC adopted changes to the eligibility requirements of Form S-3 and F-3 of the Securities Act to allow companies that do not meet the current public float requirements of the forms to nevertheless register primary offerings of their securities, subject to certain restrictions described below, including the amount of securities those companies may sell pursuant to the expanded eligibility standard in any one-year period.

These changes are intended to permit more public companies to benefit from the greater flexibility and efficiency in accessing the public securities markets afforded by Forms S-3 and F-3 in a manner that is consistent with investor protections. These amendments will become effective 30 days after their publication in the Federal Register.

Essentially, the amendments to the eligibility requirements of Form S-3 and F-3 will allow companies with less than $75 million in public float to register primary offerings of their securities on the forms, subject to the following conditions:

  • The companies must meet the other registrant conditions for the use of Form S-3 or F-3;
  • The companies are not shell companies and have not been shell companies for at least 12 calendar months before filing the registration statement;
  • The companies have a class of common equity securities listed and registered on a national securities exchange; and
  • The companies do not sell more than the equivalent of one-third of their public float in primary offerings pursuant to the new restrictions in any period of 12 calendar months.