Client Alert
Certain Shelf Registration Statements Will Expire Beginning December 1, 2008
July 31, 2008
The Securities Act Reforms adopted by the SEC in 20051 included a requirement that certain shelf registration statements filed under the Securities Act of 1933 be re-filed every three years to keep the shelf registration statements current. The three-year re-filing requirement will begin to be phased in on December 1, 2008. For any shelf registration statement subject to the re-filing requirement that became effective before December 1, 2005 (regardless of how long it had been in effect prior to that date), the three-year period began on December 1, 2005 and ends on December 1, 2008. For any shelf registration statement subject to the re-filing requirement that became effective on or after December 1, 2005, the three-year period began on the effective date of the registration statement.
Issuers should review their currently effective shelf registration statements to determine whether they are subject to the three-year re-filing requirement being phased in beginning December 1, 2008 and should begin to consider whether to prepare replacement registration statements for those requiring re-filing in advance of the expiration of the three-year period.
Registration Statements Subject to the Three-Year Re-Filing Requirement
Under Securities Act Rule 415(a)(5), the following types of securities are subject to the three-year re-filing requirement:
- Securities registered by a "well-known seasoned issuer" (WKSI) on an automatic shelf registration statement, which is effective automatically upon filing without SEC review;
- Securities registered (or qualified to be registered) on Form S-3 or Form F-3 which are to be offered and sold on an immediate, continuous or delayed basis by or on behalf of the registrant, a majority-owned subsidiary of the registrant or a person of which the registrant is a majority-owned subsidiary;
- Securities that will be offered promptly after effectiveness of the registration statement on a continuous basis and may continue to be offered more than 30 days after the date of initial effectiveness, such as dividend reinvestment/direct stock purchase plans that are not offered exclusively to existing security holders of the issuer; and
- Mortgage-related securities, including mortgage-backed debt and mortgage participation or pass through certificates.
The re-filing requirement does not apply to the following registration statements:
- Resale registration statements covering offerings by selling security holders;
- Registration statements on Form S-8 for securities offered and sold pursuant to an employee benefit plan;
- Registration statements registering securities sold pursuant to a dividend reinvestment plan solely to existing security holders of the issuer;
- Registration statements registering securities to be offered and sold upon the exercise of outstanding options, warrants or rights; or
- Registration statements covering securities to be issued upon conversion of other outstanding securities.
Grace Period for Issuers Not Filing Automatic Shelf Registration Statements
For issuers not eligible to use or not electing to use an automatic shelf registration statement, the issuer may continue to offer and sell securities using the prior registration statement after the three-year expiration of the prior registration statement in the following two circumstances:
- during a grace period that extends until the earlier of the effective date of the new registration statement or 180 days after the third anniversary of the effective date of the prior registration statement; and
- in the case of a continuous offering of securities that began within three years of the effective date of the prior registration statement, the issuer may continue to offer and sell the securities covered by the prior registration statement if such offering is covered by the new registration statement.
In order to take advantage of either of these extensions, however, the issuer must have filed a new registration statement covering the offering before the expiration of the prior registration statement.
Carrying Over Unsold Securities and Unused Fees From Prior Registration Statements
Any issuer filing a new shelf registration statement may carry over unsold securities and unused fees from a prior shelf registration statement, subject to the five-year time limit of Securities Act Rule 457(p) described below. A WKSI filing a new automatic shelf registration statement should file the registration statement prior to the expiration of the prior registration statement in order to carry over the unsold securities and unused fees from the prior registration statement. A non-WKSI (or a WKSI electing to use a non-automatic shelf registration statement) that has filed a new registration statement which has not yet become effective and that continues to offer and sell securities during the grace period using the prior registration statement will be required to amend the new registration statement prior to effectiveness in order to reflect the number of unsold securities and unused fees being carried over. The offering of securities on the prior registration statement will be deemed terminated as of the date of effectiveness of the new registration statement.
In order to effectively carry over unsold securities and unused fees, the issuer should identify on the bottom of the facing page of the new registration statement or latest amendment thereto the amount of the unsold securities being included and any filing fee paid in connection with the unsold securities, which will continue to be applied to the unsold securities.
Under Securities Act Rule 457(p), in order to carry over any unused filing fees from the prior registration statement, the new registration statement must be filed within five years of the initial filing date of the prior registration statement. Accordingly, if an existing shelf registration statement that became effective prior to December 1, 2005 is approaching the fifth anniversary of its filing, the issuer may want to consider filing the new registration statement prior to the five-year deadline (even if before the December 1, 2008 re-filing deadline) in order to be able to carry over the unsold securities and unused fees to the new registration statement.
What Issuers Should Do Now
Issuers should plan a timetable to replace expiring shelf registration statements. It will be necessary to arrange for obtaining required consents from the issuer’s independent accountants, obtain any necessary board or committee approvals, and update selling securityholder information and other matters. Issuers not filing automatic shelf registration statements should anticipate potential delays in SEC staff review of their filings due to the large number of new registration statements that may be filed before December 1, 2008. However, for WKSIs not desiring to carry over substantial unsold securities or unused fees, the three-year shelf registration renewal process may not be as urgent, as they should be able to file an automatic shelf registration statement as and when required, assuming they maintain WKSI status.
1SEC Release Nos. 33-8591; 34-52056; IC-26993; File No. S7-38-04. A copy of the release is available on the SEC’s website at www.sec.gov/rules/final/33-8591.pdf. For a summary of the new rules, see our Client Alert, "SEC Adopts "Major Securities Offering Reforms", available on our website at www.chadbourne.com/publications/sub_Publications.html.
Our client alerts are for general informational purposes and should not be regarded as legal advice.
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