REMINDER: Your shelf S-3 may be about to expire--BEAT THE HOLIDAY RUSH--RENEW NOW--

By Cydney Posner

A number of shelf registration statements will expire on December 1, 2008. Please review your clients' shelf registration statements to determine (i) if they will expire on December 1 or soon thereafter and (ii) whether new registration statements will need to be filed and the appropriate form for those registration statements.

You might recall that, as part of securities offering reform in 2005, the SEC removed the restriction on S-3 shelf registration statements that limited the number of shares that could be registered to the amount expected to be sold within the following two years. Instead, in amendments to Rule 415, the SEC imposed a blanket three-year life on WKSI automatic shelf registration statements and on shelf registration statements that relate to offerings of securities that are (i) mortgage-related, (ii) to be sold on a continuous basis, or (iii) primary S-3 or F-3 delayed or continuous offerings (Rule 415(a)(vii), (ix), or (x)). As a result, in many cases, new shelf registration statements must be filed every three years.

The three-year period specified in Rule 415(a)(5) began to run as follows:

• for a shelf registration statement that was effective before December 1, 2005, the three-year period began to run on December 1, 2005, regardless of the length of time the shelf registration statement was effective as of that date; and
• for a shelf registration statement that became effective on or after December 1, 2005, the three-year period began on the effective date of that shelf registration statement.

New WKSI automatic shelf registration statements become immediately effective. In other cases, as long as the new shelf is filed within three years of the original effective date, there is a six-month window for sales under the old shelf until the new shelf is declared effective (other than, obviously, for automatic shelves). In addition, a continuous offering of securities covered by the prior registration statement that commenced within three years of the initial effective date may continue until the effective date of the new registration statement if the offering is permitted under the new registration statement. Unsold securities and fees paid may be included in the new registration statement by identifying on the bottom of the facing page of the new registration statement or latest amendment the amount of unsold securities being included and any filing fee paid in connection with the unsold securities. The offering of securities on the earlier registration statement will be deemed terminated as of the date of effectiveness of the new registration statement.

Many companies may find, when they look at their new credit-crisis market caps, that they are no longer WKSIs or, even worse, no longer primary S-3 eligible.

• To be a WKSI, among other things, as of a date within 60 days of the determination date, a company must either (i) have a worldwide market value of its outstanding voting and non-voting common equity held by non-affiliates of $700 million or more; or (ii) have issued in the last three years at least $1 billion aggregate principal amount of non-convertible securities, other than common equity, in primary offerings for cash, not exchange, registered under the Securities Act.
• To be primary S-3 eligible, among other things, the aggregate market value of the company's voting and non-voting common equity held by non-affiliates of the company must be $75 million or more, computed by use of the price at which the common equity was last sold, or the average of the bid and asked prices of the common equity, in the principal market for the common equity as of a date within 60 days prior to the date of filing.

Careful planning is important here, If the company has recently fallen below the desired threshold, it may be still be able to file using a preferred form, at least until eligibility is retested (e.g., when the 10-K is filed), using the 60-day lookback.

As noted, the three-year limitation applies only to WKSI automatic shelf registration statements and registration statements under Rule 415(a)(vii), (ix), or (x). The limitation does not apply to registration statements solely for resales; or for employee benefit plans (S-8s); DRIPs; options, warrants or rights; conversion of outstanding securities; securities pledged as collateral; business combinations; or closed-end management investment companies or business development companies.

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