Shelf registration

Definition

Shelf registration is a procedure that allows companies to register a new issue of securities without having to sell the entire issue at once. This enables the company to sell portions of the issue over time, up to three years, as market conditions become favorable.

5 Must Know Facts For Your Next Test

1. Shelf registration helps companies manage market timing and reduce issuance costs.
2. The Securities and Exchange Commission (SEC) must approve shelf registrations.
3. Companies can use shelf registration for both debt and equity securities.
4. Shelf registration statements are filed using SEC Form S-3 or F-3 for foreign issuers.
5. Investors benefit from timely information since companies update their financials in subsequent filings before selling additional securities.

Review Questions

• What is the primary advantage of using shelf registration for a company?
• How long can a company keep securities on the shelf after initial SEC approval?
• Which SEC forms are typically used for filing shelf registrations?

Related terms

Initial Public Offering (IPO): The first sale of stock by a private company to the public.

Secondary Offering: An issuance of new shares or sale of existing shares after an IPO.

Prospectus: A formal document required by the SEC that provides details about an investment offering for sale to the public.