Question 101.01

Question: May a registrant obtain a waiver from form eligibility requirements?

Answer: Requests for waivers of form eligibility requirements are granted only under very limited circumstances and are handled solely by the Division's Office of Chief Counsel. [Feb. 27, 2009]

Question 101.02

Question: In many registered public offerings, registrants choose to include text and/or artwork inside the front and back cover pages. Are graphic presentations permitted in the prospectus?

Answer: Yes. Registrants should refer to Rule 304 of Regulation S-T. In addition, when including graphic presentations in the prospectus, registrants should be sure that:

• The graphic presentations accurately represent their current business — for example, it would not be appropriate to depict products that do not exist or are not the registrant's products, to present only the most favorable aspects of a registrant's business, to include testimonials or statistical data that are taken out of context, or to identify specific customers that are not representative of the registrant's overall customer base;

• The text in the graphic presentations adheres to plain English principles — for example, it would not be appropriate to use industry jargon or terms that are unfamiliar to the average investor or to include extensive narrative text that repeats information already contained in the summary or business sections; and

• The graphic presentations are not confusing, do not obscure other prospectus disclosure, or give undue prominence to selected portions of the registrant's business or operations. [Feb. 27, 2009]

Question 101.03

Question: Immediately after an issuer files a Securities Act registration statement, it appoints a new principal financial officer. Is the new principal financial officer required to sign any amendments to the registration statement in his or her capacity as principal financial officer?

Answer: Yes. This would be the case even if the individual had been employed as principal financial officer for only one week. [Feb. 27, 2009]

Question 101.04

Question: What financial information may an Emerging Growth Company omit from its draft and publicly filed registration statements?

Answer: Under Section 71003 of the FAST Act, an Emerging Growth Company may omit from its filed registration statements annual and interim financial information that “relates to a historical period that the issuer reasonably believes will not be required to be included…at the time of the contemplated offering.”  Interim financial information that will be included in a longer historical period relates to that period.  Accordingly, interim financial information that will be included in a historical period that the issuer reasonably believes will be required to be included at the time of the contemplated offering may not be omitted from its filed registration statements.   However, under staff policy, an Emerging Growth Company may omit from its draft registration statements interim financial information that it reasonably believes it will not be required to present separately at the time of the contemplated offering.  

For example, consider a calendar year-end Emerging Growth Company that submits a draft registration statement in November 2017 and reasonably believes it will commence its offering in April 2018 when annual financial information for 2017 will be required.  This issuer may omit from its draft registration statements its 2015 annual financial information and interim financial information related to 2016 and 2017.  Assuming that this issuer were to first publicly file in April 2018 when its annual information for 2017 is required, it would not need to separately prepare or present interim information for 2016 and 2017.  If this issuer were to file publicly in January 2018, it may omit its 2015 annual financial information, but it must include its 2016 and 2017 interim financial information in that January filing because that interim information relates to historical periods that will be included at the time of the public offering.  [Aug. 17, 2017]

Question 101.05

Question: What financial information may an issuer that is not an Emerging Growth Company omit from its draft and publicly filed registration statements?

Answer: The relief provided by Section 71003 of the FAST Act is not available to issuers other than Emerging Growth Companies. However, under staff policy, an issuer that is not an Emerging Growth Company may omit from its draft registration statements interim and annual financial information that it reasonably believes it will not be required to present separately at the time it files its registration statement publicly. The issuer may not omit any required financial information from its filed registration statements.

For example, consider a calendar year-end issuer that is not an Emerging Growth Company that submits a draft registration statement in November 2017 and reasonably believes it will first publicly file in April 2018 when annual financial information for 2017 will be required. This issuer may omit from its draft registration statements its 2014 annual financial information and interim financial information related to 2016 and 2017 because this information would not be required at the time of its first public filing in April 2018. [Aug. 17, 2017]

Question 102.01

Question: The F-Series registration statements require the signature of the registrant's authorized U.S. representative. Who is qualified to sign as an authorized U.S. representative?

Answer: The term "authorized U.S. representative" is discussed in Securities Act Release No. 6360 (Nov. 20, 1981). The release states that "the Commission generally accepts the signature of an individual who is an employee of the registrant or an affiliate, or who is the registrant's counsel or underwriter in the United States for the offering, because the signature clearly identifies an individual that is connected with the offering as subject to the liability provisions of the Securities Act. By similar reasoning, the Commission generally has refused to accept the appointment of a newly formed or shell corporation in the United States as the authorized representative."

In the case of registrants with dual governing boards, the registration statement should be signed by whichever board has the authority to bind the company and performs functions most similar to those of a U.S. company's board of directors. In some cases, this may require the signatures of the members of both governing boards. The registration statement disclosure requirements relating to the registrant's board of directors generally would apply to members of both governing boards. [Feb. 27, 2009]

Question 102.02

Question: Item 2 of Forms F-7, F-8, F-9 and F-80 and Item 3 of Form F-10 specify certain legends that should be included, to the extent applicable, on the outside front cover page of the prospectus. May a Canadian issuer substitute plain English versions of these legends? If so, is there required language that should be used in the plain English versions?

Answer: Issuers eligible to use these forms may substitute the following plain English versions of the first four legends required by these items of the forms, in place of the versions currently set forth in the forms:

"We are permitted to prepare this prospectus in accordance with Canadian disclosure requirements, which are different from those of the United States. We prepare our financial statements in accordance with Canadian generally accepted accounting practices, and they may be subject to Canadian auditing and auditor independence standards. They may not be comparable to financial statements of United States companies."

"Owning the [securities] may subject you to tax consequences both in the United States and Canada. This prospectus or any applicable prospectus supplement may not describe these tax consequences fully. You should read the tax discussion in any applicable prospectus supplement."

"Your ability to enforce civil liabilities under the United States federal securities laws may be affected adversely because we are incorporated in [province/Canada], [some/all] of our officers and directors and [some/all] of the experts named in this prospectus are Canadian residents, and [many/all] of our assets are located in Canada."

"Neither the Securities and Exchange Commission nor any state securities regulator has approved or disapproved these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense."

In addition, the legend required by Item 2 of Form F-9 and Item 3 of Form F-10 for prospectuses used before the effective date of the registration statement may be presented in the following plain English version:

"The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted." [Feb. 27, 2009]

Question 102.03

Question: When a foreign private issuer guarantees securities of a subsidiary that is not a foreign private issuer, may the parent company-guarantor and subsidiary-issuer of guaranteed securities use an F- series registration statement to register an offering of the securities under the Securities Act and use Form 20-F with respect to any reporting obligations?

Answer: Yes, if certain requirements are satisfied. Rule 3-10 of Regulation S-X permits modified reporting by subsidiary issuers of guaranteed securities and subsidiary guarantors. Separate financial statements need not be filed for subsidiaries if any of Rules 3-10(b) through 3-10(d) apply and all applicable conditions of the rule relied upon are met in the parent company's filings. If the parent and issuer are eligible to present condensed consolidated financial information in the parent company's filings and the parent qualifies as a foreign private issuer, the parent company and its subsidiaries may use an F-series registration statement to register an offering of guarantees and guaranteed securities that are issued by a domestic or foreign subsidiary that does not qualify as a foreign private issuer and use Form 20-F with respect to any reporting obligations associated with such registration statement. The same would apply if the parent and subsidiaries are eligible to present narrative disclosure in lieu of condensed consolidating financial information under Rule 3-10. [December 8, 2016]

Question 102.04

Question: When a parent foreign private issuer issues securities that are guaranteed or co-issued by one or more subsidiaries that do not themselves qualify as a foreign private issuer, may the parent company-issuer and subsidiary-guarantor(s) or co-issuers use an F- series registration statement to register an offering of the securities under the Securities Act and use Form 20-F with respect to any reporting obligations?

Answer: Yes, if certain requirements are satisfied. In this situation, separate financial statements need not be filed for subsidiaries if either Rule 3-10(e) or 3-10(f) applies and all applicable conditions of the rule relied upon are met in the parent company's filings. As described in the last two sentences of Securities Act Forms CDI 102.03 / Exchange Act Forms CDI 110.03, when a parent foreign private issuer issues securities guaranteed or co-issued by one or more subsidiaries that do not themselves qualify as a foreign private issuer, the parent and subsidiary may use an F- series registration statement when they are eligible to present condensed consolidating financial information or narrative disclosure. [December 8, 2016]

Question 103.01

Question: May a foreign issuer register only part of a worldwide equity or debt offering with the Commission?

Answer: Yes. Foreign issuers may register only a portion of a worldwide equity or debt offering so long as the amount registered with the Commission covers the securities sold in the U.S. and any possible flow-back of securities into the U.S. [Feb. 27, 2009]

Question 103.02

Question: May a foreign issuer use a U.K.-style or other foreign-style document as a prospectus in the U.S.?

Answer: Yes. A foreign issuer may use a U.K-style or other foreign-style document as a prospectus in the U.S., so long as the information required under the Commission's rules is included in the document. Some modification of the presentation and placement of information may be necessary in order to reflect the Commission's "plain English" requirements, such as the requirements for presentation of risk factors. [Feb. 27, 2009]

Question 103.03

Question: Must a foreign issuer include a risk factor addressing possible illiquidity of its offered securities in the U.S. when making its U.S. equity initial public offering if the issuer has an existing, established trading market for its equity securities outside the U.S.?

Answer: No. Although risk factors disclosure is generally required for all initial public offerings, a foreign issuer that is making its U.S. equity initial public offering and has an existing and established trading market for its equity securities outside the U.S. generally is not required to include a risk factor addressing possible illiquidity of the offered securities in the U.S. [Feb. 27, 2009]

Question 105.01

Question: May Form F-6 be used for the registration of installment receipts?

Answer: Yes. Form F-6 may be used to register installment receipts even though the form, by its terms, is not available in cases where the underlying shares are not withdrawable. [Feb. 27, 2009]

Question 105.02

Question: May Form F-6 be used to register American Depositary Shares ("ADS") when local government law prohibits the withdrawal and holding of underlying shares by U.S. and other foreign persons?

Answer: Yes. Form F-6 may be used to register ADS even though local government law prohibits the withdrawal and holding of underlying shares by U.S. and other foreign persons. For example, certificates of participation issued by a master trust established with respect to the securities of Mexican companies should be registered on Form F-6, even though the form, by its terms, is not available in cases where the underlying shares are not withdrawable. [Feb. 27, 2009]

Question 105.03

Question: Does a change in the depositary of an American Depositary Receipt ("ADR") program require the filing of a new registration statement on Form F-6?

Answer: Yes. A new registration statement on Form F-6 must be filed if the depositary for an ADR program changes. [Feb. 27, 2009]

Question 105.04

Question: When establishing a company-sponsored ADR program, what steps must the depositary and company take regarding an existing unsponsored ADR program for the company's securities?

Answer: When a registration statement on Form F-6 is filed in connection with the establishment of a company-sponsored ADR program, the depositary and the company will be required to provide a representation that arrangements are in place to terminate any existing unsponsored ADR programs for the company's securities in a prompt and orderly fashion. Written confirmation from the depositaries of the unsponsored programs as to their concurrence with such arrangements may be required. [Feb. 27, 2009]

Question 106.01

Question: May the U.S./Canadian Multijurisdictional Disclosure System ("MJDS"), and in particular, Form F-7, be used for rights offers exempt from Canadian registration requirements, notwithstanding the general prohibition on the use of the system for exempt offerings?

Answer: Yes. The MJDS, and in particular, Form F-7, may be used for rights offers exempt from Canadian registration requirements, notwithstanding the general prohibition on the use of the system for exempt offerings. The offering circular and any other material used to make the offers constitute the "prospectus" for purposes of Form F-7. [Feb. 27, 2009]

Question 107.01

Question: Under what circumstances may a Form F-8 filer modify the required legend regarding the securities not being approved or disapproved by the Commission?

Answer: The required legend with respect to the securities not being approved or disapproved by the Commission may be modified to add a reference to the fact that state regulators have not approved or disapproved such securities. [Feb. 27, 2009]

Question 107.02

Question: May Form F-8 or Form F-80 be used for a statutory share exchange, which only requires the vote of the shareholders of the company being acquired?

Answer: Yes. Although Forms F-8 and F-80 refer to business combinations requiring the vote of the shareholders of the companies that are the parties to the combination, either form may be used in the case of a statutory share exchange, which only requires the vote of the shareholders of the company being acquired. [Feb. 27, 2009]

Question 108.01

Question: May Form F-9 be used to register Form F-9-eligible securities that are convertible after one year into another class of the issuer's securities?

Answer: Yes. Form F-9-eligible securities which are convertible after one year into another class of the issuer's securities may be registered on Form F-9, but the securities into which they are convertible also must be F-9-eligible securities, independent of the convertible securities. [Feb. 27, 2009]

Question 108.02

Question: When an issuer files a registration statement on Form F-9 or Form F-10 in connection with a shelf offering in Canada and updates that shelf registration in Canada, must the issuer also file a post-effective amendment to its registration statement on Form F-9 or Form F-10?

Answer: Yes. When updating its shelf registration in Canada, an issuer must also file a post-effective amendment to its registration statement on Form F-9 or Form F-10 relating to its shelf registration in Canada. [Feb. 27, 2009]

Question 109.01

Question: Item 2 of Form F-10 requires that financial statements included in the home jurisdiction document must be reconciled to U.S. GAAP as required by Item 18 of Form 20-F. Does this reconciliation requirement apply to all financial statements filed under cover of Form F-10, including interim financial statements?

Answer: The reconciliation requirement in Item 2 of Form F-10 applies to the issuer's annual financial statements and year-to-date financial statements (including comparative periods) and does not require that any other interim financial statements be reconciled to U.S. GAAP. This interpretation is consistent with the reconciliation requirements of Form F-1. Reconciliation of annual and year-to-date financial statements is required regardless of whether they are included directly or incorporated by reference. However, the reconciliation requirement does not apply to year-to-date financial statements included under cover of Form F-10 if Item 8.A.5 of Form 20-F would not require a Form F-1 registrant to provide interim financial statements for the same period. [Feb. 27, 2009]

Question 109.02

Question: May an issuer use Form F-10 if it satisfies the eligibility requirements of the form at the time of filing, but will not satisfy such requirements upon the closing of the offering?

Answer: Yes. Under Securities Act Rule 401(a), form eligibility is established at the time of the initial filing. [Feb. 27, 2009]

Question 109.03

Question: May Form F-10 be used for secondary offerings?

Answer: Yes. [Feb. 27, 2009]

Question 109.04

Question: May a Canadian issuer use Form F-10 for a dividend reinvestment plan ("DRIP") even though there is a Canadian exemption from registration that is available for DRIPs?

Answer: Yes. If a MJDS-eligible issuer wants to use Form F-10 for a DRIP and is willing to voluntarily file a registration statement in Canada despite the Canadian registration exemption that is available for DRIPs, the issuer may file on Form F-10. In doing so, however, the Canadian issuer is, in effect, waiving the benefit of this exemption and should consider itself subject to Canadian requirements applicable to offerings generally (including, if applicable, the requirement that the prospectus be circulated to Canadian shareholders). [Feb. 27, 2009]

Question 109.05

Question: May an issuer use Form F-10 to register a rights offering that is not eligible for registration on Form F-7, even though the issuer is exempt from the requirement to file a prospectus with the Canadian authorities?

Answer: Yes. The Commission revised General Instruction I.J of Form F-10 in Securities Act Release No. 6902A (Mar. 23, 1992) to clarify that a Form F-10 registrant may file a rights offering circular prepared pursuant to Canadian requirements in lieu of a prospectus. In such case, the registrant must include in the Form F-10 a reconciliation to U.S. GAAP for those financial statements that are required to accompany a rights offering circular filed with the Canadian authorities. [Feb. 27, 2009]

Question 109.06

Question: May MJDS-eligible registrants use Form F-10 to register so-called "A/B" or "Exxon Capital" exchange offers?

Answer: Yes. MJDS-eligible registrants may use Form F-10 to register so-called "A/B" or "Exxon Capital" exchange offers that would otherwise be eligible for registration on Form F-1 or Form F-4, if appropriate procedures are followed. [Feb. 27, 2009]

Question 109.07

Question: When an issuer files a registration statement on Form F-9 or Form F-10 in connection with a shelf offering in Canada and updates that shelf registration in Canada, must the issuer also file a post-effective amendment to its registration statement on Form F-9 or Form F-10?

Answer: Yes. When updating its shelf registration in Canada, an issuer must also file a post-effective amendment to its registration statement on Form F-9 or Form F-10 relating to its shelf registration in Canada. [Feb. 27, 2009]

Question 110.01

Question: May Form F-8 or Form F-80 be used for a statutory share exchange, which only requires the vote of the shareholders of the company being acquired?

Answer: Yes. Although Forms F-8 and F-80 refer to business combinations requiring the vote of the shareholders of the companies that are the parties to the combination, either form may be used in the case of a statutory share exchange, which only requires the vote of the shareholders of the company being acquired. [Feb. 27, 2009]

Question 113.01

Question: If a continuous offering under Securities Act Rule 415 is registered on Form S-1, is a post-effective amendment required to be filed in order to satisfy the requirements of Securities Act Section 10(a)(3), to reflect fundamental changes or to disclose material changes in the plan of distribution?

Answer: Yes. A post-effective amendment is required in these circumstances pursuant to the issuer's Item 512(a) undertakings. Form S-1 does not provide for forward incorporation by reference of Exchange Act reports filed after the effective date of the registration statement. Other changes to the information in the prospectus contained in the registration statement generally may be made by filing a prospectus supplement. [Feb. 27, 2009]

Question 113.02

Question: How should a registrant conducting a continuous offering on Form S-1 update the prospectus to reflect the information in its subsequently filed Exchange Act reports?

Answer: If Form S-1 is used for a continuous offering, the prospectus may have to be revised periodically to reflect new information since, unlike Form S-3, the form does not provide for incorporation by reference of subsequent periodic reports. For example, in a continuous offering on a Form S-1 pursuant to Rule 415(a)(1)(ix), a registrant wants to update the prospectus to include Exchange Act reports filed after the effective date of the Form S-1. Item 512(a)(1) of Regulation S-K requires certain changes, including a Section 10(a)(3) update, to be reflected in a post-effective amendment. Other changes may be made in a prospectus supplement filed pursuant to Rule 424(b). If the registrant files a post-effective amendment, it could incorporate by reference previously filed Exchange Act reports if it satisfied the conditions in Form S-1 allowing incorporation by reference. [Jan. 26, 2009]

Question 113.03

Question: Is a registrant that operates a resort (hotel, golf course and spa) in a service industry or the real estate business? The registrant is unsure whether Form S-1 or Form S-11 would be the appropriate registration statement for an offering.

Answer: A registrant that operates a resort (hotel, golf course and spa) is in a service industry. Accordingly, Form S-1, and not Form S-11, would be appropriate for its offering. [Feb. 27, 2009]

Question 113.04

Question: The ability to incorporate by reference previously filed Exchange Act reports and other materials in Form S-1 is conditioned on the issuer making its incorporated Exchange Act reports and other materials readily accessible on a web site maintained by or for the issuer. May an issuer link to the Commission's EDGAR system to satisfy this requirement?

Answer: An issuer may satisfy this requirement by including on the web site maintained by or for the issuer hyperlinks directly to the issuer's reports or other materials filed on EDGAR. It also may link directly to the issuer's EDGAR filing page. However, linking to the Commission's EDGAR system generally, or to a page where an investor would be required to select the issuer or input the issuer's name, will not satisfy this requirement. [Feb. 27, 2009]

Question 113.05

Question: Form S-1 allows eligible registrants to elect "backwards" incorporation by reference of previously filed Exchange Act reports and other materials. At effectiveness, must the prospectus filed as part of the Form S-1 registration statement identify all previously filed Exchange Act reports and materials that are incorporated by reference?

Answer: Yes. If the registrant elects to incorporate by reference pursuant to General Instruction VII and Item 12 of Form S-1, then it must incorporate by reference, in their entirety, all Exchange Act reports and other materials required by Item 12. If a registrant wants to incorporate by reference an Exchange Act report that the registrant files after the filing date of a Form S-1 or an amendment thereto but prior to effectiveness, the registrant must file a pre-effective amendment to include a specific reference to such report in the prospectus filed as part of the registration statement. [Feb. 27, 2009]

Question 113.06

Question: If the issuer's annual report on Form 10-K and other periodic reports filed since the end of the fiscal year for which the annual report was filed provide only a portion of the information required by any Form S-1 line item requirement, can the issuer incorporate the periodic reports by reference and supplement or update that information with additional information included directly in the Form S-1 in order to satisfy the line item requirements of the form?

Answer: Yes. [Feb. 27, 2009]

Question 113.07

Question: May a registrant filing a Form S-1 include information about a Form S-3 company in its prospectus through incorporation by reference?

Answer: No. This procedure is not authorized by Form S-1 or Rule 411. If the information about the other company is material, it must be set forth in the prospectus in full. [Jan. 26, 2009]

Question 113.08

Question: May a Form S-1 be post-effectively amended at the time of the required Section 10(a)(3) update to incorporate by reference the issuer's new Form 10-K?

Answer: Yes, provided that the post-effective amendment is filed only after the issuer has filed its new Form 10-K and the issuer meets all of the requirements for incorporation by reference into Form S-1 at the time of the post-effective amendment. As Form S-1 does not provide for forward incorporation by reference, a post-effective amendment filed after the issuer files its new Form 10-K would meet the requirements of Form S-1 at the date of filing, and the effective date of the post-effective amendment would be a new effective date of the registration statement for purposes of Securities Act Sections 10(a)(3) and 11. [Feb. 27, 2009]

Question 114.01

Question: May an issuer file a new Form S-3 notwithstanding its inability to satisfy General Instruction I.A.3(b) of the form?

Answer: No. However, an issuer can request relief from the timeliness requirements of General Instruction I.A.3(b). Relief is granted only in very limited circumstances. Issuers should contact the Division's Office of Chief Counsel for additional information on how to make such a request. [Feb. 27, 2009]

Question 114.02

Question: At the time of an update of the registration statement under Securities Act Section 10(a)(3), the market value of the registrant's common equity held by non-affiliates does not meet the minimum required by General Instruction I.B.1. May the registrant continue to use Form S-3 to conduct primary offerings pursuant to that instruction?

Answer: No. A registrant must be eligible to use Form S-3 each time it updates the registration statement under Section 10(a)(3). In this case, because the registrant no longer meets the transactional requirements of General Instruction I.B.1, it must amend its registration statement onto the form it is then eligible to use for a primary offering. If the registrant has a class of common equity securities listed and registered on a national securities exchange, it should consider whether it is eligible to use Form S-3 pursuant to General Instruction I.B.6. [Feb. 27, 2009]

Question 114.03

Question: How should the issuer complete the calculation of registration fee table on the face of an automatic shelf registration statement?

Answer: The calculation of registration fee table should list each type of security being registered and either state whether a filing fee is being paid with the filing (in which case the dollar amount of the fee should be set forth, as in the case of an unallocated shelf registration statement today), or indicate "$0" in the filing fee table and state that the filing fee will be paid subsequently in advance or on a pay-as-you-go basis. [Jan. 26, 2009]

Question 114.04

Question: Must a registrant evaluate its eligibility to use Form S-3 at the time it files a Form 10-K?

Answer: Yes. For purposes of Rule 401(b), the updating of a Form S-3 registration statement through the incorporation of a Form 10-K is the equivalent of filing a post-effective amendment to update the registration statement pursuant to Section 10(a)(3). This means that if the registrant is not eligible to use Form S-3 at the time of such updating, it would be required to file a post-effective amendment on whatever other form would be available at the time. [Feb. 27, 2009]

Question 114.05

Question: May an issuer file or use an automatic shelf registration statement on Form S-3 after the issuer has filed its Form 10-K but prior to filing the Part III information that will be incorporated by reference into the Form 10-K?

Answer: Yes. However, issuers are responsible for ensuring that any prospectus used in connection with a registered offering contains the information required to be included therein by Securities Act Section 10(a) and Schedule A. [Jan. 26, 2009]

Question 114.06

Question: If an issuer has a resale registration statement on Form S-3 or Form F-3 that became effective prior to December 1, 2005, may it rely on Rule 430B to use prospectus supplements for the purpose of making material amendments to the plan of distribution or replacing selling security holders due to transfers or adding new selling security holders?

Answer: Yes. An issuer with an effective resale registration statement may rely on Rule 430B and file prospectus supplements pursuant to Rule 424(b) to make material amendments to the plan of distribution or to add or replace selling security holders, provided that in the case of adding or replacing selling security holders, the other conditions in Rule 430B regarding naming selling security holders by prospectus supplement are satisfied. [Feb. 27, 2009]

Question 114.07

Question: May a well-known seasoned issuer file an automatic shelf registration statement while it has a pending confidential treatment request on an exhibit to a periodic or current report?

Answer: Yes. Well-known seasoned issuers are not required to delay filing an automatic shelf registration statement until pending confidential treatment applications are acted upon. However, the well-known seasoned issuer must assure that any prospectus used in an offering contains the information required to be included by Securities Act Section 10(a) and applicable rules thereunder. [Feb. 27, 2009]

Question 115.01

Question: Will the delinquent filing of a Form 11-K by an issuer's employee benefit plan disqualify the issuer from using Form S-3?

Answer: No. While General Instruction I.A.3 of Form S-3 requires an issuer to have timely filed all periodic reports during the preceding twelve months, the Form 11-K filing obligation is the plan's obligation, not the issuer's. Hence, a late filing of a Form 11-K is not considered in determining the issuer's eligibility for Form S-3. [Feb. 27, 2009]

Question 115.02

Question: In annual reports for fiscal years ending on or after December 15, 2007 but before December 15, 2009, non-accelerated filers are required to provide management's report on internal control over financial reporting pursuant to Item 308T of Regulation S-K. The report is deemed not to be "filed" for purposes of Section 18 of the Exchange Act, unless the company specifically states that the report is to be considered "filed" under the Exchange Act or incorporates it by reference into a filing under the Securities Act or the Exchange Act. Does a non-accelerated filer's failure to provide management's report in its Form 10-K under Item 308T(a) affect its form eligibility or the ability to use Rule 144?

Answer: It is the Division's view that the failure to provide this management report renders the annual report materially deficient. As a result, if management did not complete the evaluation and provide the report as required by Item 308T(a), the company would not be timely or current in its Exchange Act reporting. This would result in the company not being eligible to file new Form S-3 or Form S-8 registration statements and the loss of the availability of Rule 144. Because the filing of the Form 10-K constitutes the Section 10(a)(3) update for any effective Forms S-3 or S-8, the company also would be required to suspend any sales under already effective registration statements.

However, if the company subsequently amends its Form 10-K to provide management's report on whether or not internal control is effective, the company can file new Forms S-8 and resume making sales under already effective Forms S-8, and shareholders can avail themselves of Rule 144 (assuming all other conditions to use of the form or rule are satisfied). This would be the case regardless of whether management reached an effective or ineffective conclusion about its internal control. Although amending the Form 10-K to provide management's report may result in the company becoming current, it would remain untimely and would not be eligible to file new Forms S-3. [July 3, 2008]

Question 115.03

Question: An issuer otherwise eligible to use Form S-3 failed to file a current report on Form 8-K fourteen months before the proposed filing of the Form S-3. Is Form S-3 available to the registrant?

Answer: Yes. Form S-3 is available because the condition to have filed all required Exchange Act reports and on a timely basis applies only to reports required to be filed in the preceding twelve months. [Feb. 27, 2009]

Question 115.04

Question: General Instruction I.A.3 to Form S-3 requires that the registrant have timely filed all reports required to be filed during the twelve calendar months and any portion of a month immediately preceding the filing of the registration statement. What reports are covered by this Instruction?

Answer: In determining eligibility for use of Form S-3, the requirement that the registrant has filed in a timely manner all reports required to be filed during the past twelve calendar months refers only to Section 13(a) or 15(d) reports and Section 14(a) and 14(c) materials. [Feb. 27, 2009]

Question 115.05

Question: May a domestic company that succeeds to the reporting obligations of a foreign private issuer, and is otherwise eligible to file a Form S-3, incorporate by reference the predecessor's annual report on Form 20-F to satisfy the disclosure requirements of Form S-3?

Answer: No. Either the issuer would have to include audited financial statements and other disclosures satisfying the requirements of Form S-3 or it could wait until it has filed its first annual report on Form 10-K to incorporate by reference the Form 10-K into the Form S-3. [Feb. 27, 2009]

Question 115.06

Question: General Instruction I.A.3 of Form S-3 requires that the registrant have filed all material required to be filed for a period of at least twelve calendar months immediately preceding the filing of the registration statement. The instruction also requires that the registrant have filed in a timely manner all reports required to be filed during the twelve calendar months and any portion of a month immediately preceding the filing of the registration statement. How is calendar month calculated?

Answer: For purposes of these eligibility requirements, a calendar month begins on the first day of the month and ends on the last day of that month. Hence, if a registrant were not timely on a Form 10-Q due on September 15, 2008, but was timely thereafter, it would first be eligible to use Form S-3 on October 1, 2009. [Feb. 27, 2009]

Question 115.07

Question: A company failed to furnish an Item 2.02 Form 8-K. As a result, does the company lose its eligibility to file a registration statement on Form S-3?

Answer: General Instruction I.A.3(b) to Form S-3 requires that all reports required to be filed with the Commission during the preceding 12 months have been filed. Because an Item 2.02 Form 8-K is furnished, rather than filed, this failure to furnish does not adversely affect the company's eligibility to use Form S-3. [Feb. 27, 2009]

Question 115.08

Question: What does the reference to "material" in General Instruction I.A.5 of Form S-3 apply to?

Answer: The reference to materiality applies to defaults on indebtedness and on long-term lease rentals. It does not apply to the failure to declare dividends or make sinking fund installments on preferred stock. [Feb. 27, 2009]

Question 115.09

Question: Is the omission to declare a dividend on non-cumulative preferred stock a payment failure disqualifying an issuer from using Form S-3?

Answer: No, because there is no liability to pay the dividend that arises under the terms of the non-cumulative preferred. This omission cannot be equated to a payment default on a debt instrument or capital lease. A declared but unpaid dividend on preferred stock, however, would disqualify the issuer from using Form S-3, as would the existence of accrued and unpaid dividends on cumulative preferred stock. [Feb. 27, 2009]

Question 115.10

Question: Does a default on a covenant not involving an "installment on indebtedness" disqualify a company from using Form S-3?

Answer: No. A default will be disqualifying only if it involves failure to pay principal or interest on indebtedness and is material to the financial position of the registrant and its subsidiaries, taken as a whole. [Feb. 27, 2009]

Question 115.11

Question: In the event an installment payment on indebtedness has been missed, but the terms of the debt do not define a missed payment as a default until the creditors take some action, can an issuer satisfy General Instruction I.A.5 of Form S-3?

Answer: Yes, if the company makes a determination that there is no default as a legal matter. [Feb. 27, 2009]

Question 115.12

Question: An issuer committed a material default on indebtedness but the holders of the securities subsequently waived the default. Can an issuer satisfy General Instruction I.A.5 of Form S-3?

Answer: No. Regardless of the fact that a disqualifying default is either cured or waived after it occurs, the form may not be used between the date of the default and the audit at the end of the fiscal year in which such material default occurred. [Feb. 27, 2009]

Question 115.13

Question: In the event a prospective default never occurs because the lenders have waived payment in advance of the due date, can an issuer satisfy General Instruction I.A.5 of Form S-3?

Answer: Yes. [Feb. 27, 2009]

Question 115.14

Question: From which date should an issuer measure the twelve-month period in General Instruction I.A.3 to Form S-3?

Answer: The twelve-month period for which a registrant must have been subject to the requirements of Section 12 or 15(d) of the Exchange Act, and filed certain required materials under Section 13, 14 or 15(d) of the Exchange Act, relates to the effective date of the registrant's Securities Act or Exchange Act registration statement that gave rise to the filing obligation. Thus, the date on which the registration statement was initially filed is not taken into consideration in computing the twelve-month period. [Feb. 27, 2009]

Question 115.15

Question: Would an issuer that timely filed its Exchange Act reports during the past twelve months, but was not required to file reports under the Exchange Act for a portion of that period, be able to satisfy Instruction I.A.3 of Form S-3?

Answer: In order to be eligible to use Form S-3, an issuer must have been subject to the requirements of Exchange Act Section 12 or 15(d) for a period of at least twelve months. An issuer that timely filed its Exchange Act reports during the past twelve months, but was not subject to Section 12 or 15(d) for a portion of that period (and therefore was reporting on a voluntary basis during that portion), would be eligible to use Form S-3 only under the conditions specified in the Lamar Advertising Co. no-action letter (Nov. 18, 1996) issued by the Division. [Aug. 14, 2009]

Question 115.16

Question: If a company defaults on indebtedness, which default is material to the company as a whole, or fails to pay a dividend on preferred stock, can the company satisfy the eligibility requirement in Instruction I.A.5 of Form S-3 in the following fiscal year even if the default has not been cured, or the dividends have not been paid?

Answer: Yes, provided that the company has filed a Form 10-K including audited financial statements covering the period in which the material event of default or failure to pay preferred dividends occurred. If, after the end of the fiscal year, the company has a new material event of default or a new failure to pay dividends on preferred stock, then the company would not be eligible to use Form S-3 until the filing of its next Form 10-K. See Securities Act Release No. 6331 (Aug. 6, 1981). [June 4, 2010]

Question 115.17

Question: If a company declares bankruptcy and subsequently fails to make interest or principal payments on indebtedness as required pursuant to the terms of the indebtedness, can the company nonetheless satisfy the eligibility requirement in Instruction I.A.5 of Form S-3 since the filing of bankruptcy results in an automatic stay of creditors' rights with respect to the company's indebtedness?

Answer: No. [June 4, 2010]

Question 115.18

Question: Following the merger of a private operating company or companies with or into a reporting shell company (for example, a special purpose acquisition company), may the resulting combined entity rely on the reporting shell company’s pre-combination reporting history to satisfy the eligibility requirements of Form S-3 during the 12 calendar months following the business combination?

Answer: If the registrant is a new entity following the business combination transaction with a shell company, the registrant would need 12 calendar months of Exchange Act reporting history following the business combination transaction in order to satisfy General Instruction I.A.3 before Form S-3 would become available. If the registrant is a “successor registrant,” General Instruction I.A.6(a) would not be available because the succession was not primarily for the purpose of changing the state of incorporation of the predecessor or forming a holding company. General Instruction I.A.6(b) also would not be available because the private operating company or companies would not have met the registrant requirements to use Form S-3 prior to the succession. Where the registrant is not a new entity or a “successor registrant,” the combined entity would have less than 12 calendar months of post-combination Exchange Act reporting history. Form S-3 is premised on the widespread dissemination to the marketplace of an issuer’s Exchange Act reports over at least a 12-month period. Accordingly, in situations where the combined entity lacks a 12-month history of Exchange Act reporting, the staff is unlikely to be able to accelerate effectiveness under Section 8(a) of the Securities Act, which requires the staff, among other things, to give “due regard to the adequacy of the information respecting the issuer theretofore available to the public,…and to the public interest and the protection of investors.” [September 21, 2020]

Question 116.01

Question: May a registrant use Form S-3 for the registration of securities issued under an employee benefit plan?

Answer: Yes, so long as the sponsoring company, as issuer of the securities, meets all of the requirements for use of the form, including those set forth in General Instruction I.B.1 for primary offerings. The information concerning the plan required by Form S-8 would have to be included in the Form S-3 prospectus. Plan interests, however, may not be registered on Form S-3 because the plan, as issuer, typically will not satisfy Form S-3 eligibility standards. When plan interests are being registered, the plan will be subject to S-1 level disclosure (regardless of whether the sponsoring company registers its securities on Form S-1 or Form S-3), including Section 10(a)(3) updating requirements. [Feb. 27, 2009]

Question 116.02

Question: A registrant meets the registrant requirements for Form S-3, but does not meet the transaction requirements for a primary offering. The registrant has two majority-owned subsidiaries. Would Form S-3 be available for secondary offerings of its securities by the two subsidiaries?

Answer: No. In these circumstances, the offerings of the registrant's securities by its majority-owned subsidiaries would be treated as if they were primary offerings by the registrant, since the subsidiaries are considered alter egos of the registrant. Accordingly, since the registrant is not eligible to use Form S-3 for a primary offering, the offering of the registrant's securities by its subsidiaries likewise may not be registered on Form S-3. [Feb. 27, 2009]

Question 116.03

Question: Is Form S-3 available to an issuer that meets the form's registrant requirements to register offers and sales pursuant to customer stock purchase plans?

Answer: Form S-3 is not available to register offers and sales pursuant to customer stock purchase plans unless the issuer meets the form's registrant requirements as well as the transaction requirements for primary offerings set forth in General Instruction I.B.1 of Form S-3. [Feb. 27, 2009]

Question 116.04

Question: Is Form S-3 available to register shares underlying options whose exercise consideration can be cash or, in the alternative, shares of the same class as those underlying the options?

Answer: Yes. [Feb. 27, 2009]

Question 116.05

Question: In reliance on Securities Act Section 4(2), a merger transaction will not be registered. May resales of earnout shares to be issued in connection with the merger be registered on Form S-3 pursuant to General Instruction I.B.3 after the consummation of the merger, even though the shares have not been earned and are not outstanding at the time the registration statement is filed?

Answer: Yes. [Feb. 27, 2009]

Question 116.06

Question: For purposes of computing the "float" under General Instruction I.B.1, what day should be used in determining the number of shares held by non-affiliates?

Answer: General Instruction I.B.1 to Form S-3 provides, in part, that the form may be used for a primary offering when the aggregate market value of the outstanding voting and non-voting common equity held by non-affiliates of the registrant is $75 million or more. As the instruction indicates, the aggregate market value may be computed by taking the average of the bid and asked prices of such common equity, as of a date within 60 days prior to the date of filing, and multiplying that price by the number of shares of such common equity held by non-affiliates. In making this computation, it is not necessary to calculate the number of shares held by non-affiliates for the same day on which the average price of the stock is determined. For example, the number of shares outstanding on the date of filing might be used, together with the average price of stock for any day within the 60-day period. [Feb. 27, 2009]

Question 116.07

Question: When a registrant reassesses Form S-3 eligibility in connection with a Section 10(a)(3) update, for purposes of computing the "float" under General Instruction I.B.1, what day should be used in determining the number of shares held by non-affiliates?

Answer: The registrant can use any day during the 60-day "look back" period from the filing date of the Form 10-K in determining the number of shares held by non-affiliates. [Feb. 27, 2009]

Question 116.08

Question: General Instruction I.B.I requires that the aggregate market value of the voting and non-voting common equity held by non-affiliates be at least $75 million. In order to calculate whether this condition has been met, must the common equity be traded on a public market, such as an exchange, the OTC Bulletin Board, or the Pink Sheets?

Answer: Yes. [Feb. 27, 2009]

Question 116.09

Question: What is the meaning of the "for cash" requirement in General Instruction I.B.1 of Form S-3?

Answer: The "for cash" reference was intended only to make clear that Form S-3 is not available for exchange offers or other business combination transactions. Accordingly, Form S-3 would be available, for example, for transactions in which the consideration for the securities consists of promissory notes or services performed for the issuer by the recipient of the securities. [Feb. 27, 2009]

Question 116.10

Question: May a company use Form S-3 to register the offer and sale of both an immediately convertible security and the underlying security?

Answer: Yes. A company meeting the float test of General Instruction I.B.1 of Form S-3 may use that form to register the offer and sale of both an immediately convertible security and the underlying security. The fact that subsequent conversions may occur at a time when the company does not meet the transaction requirement of General Instruction I.B.4 of Form S-3, which is available for conversions, would not affect the initial registration of the offer of such underlying securities. If it becomes necessary to update the registration statement in accordance with Section 10(a)(3), the company may accomplish such update by incorporation by reference or post-effective amendment on Form S-3 only if it meets the conditions for the use of the form at that time. [Feb. 27, 2009]

Question 116.11

Question: In order to use General Instruction I.B.3 of Form S-3 for the secondary offering of a convertible or exercisable security, such as a common stock purchase warrant, is it necessary that the warrants themselves be listed on an exchange or quoted on an automated quotation system of a national securities association?

Answer: No. The fact that the underlying common stock is listed or quoted is sufficient to satisfy the requirements of the instruction. [Feb. 27, 2009]

Question 116.12

Question: For purposes of General Instruction I.B.3 of Form S-3, does "quoted on the automated quotation system of a national securities association" include securities quoted on the OTC Bulletin Board or the Pink Sheets?

Answer: No. [Feb. 27, 2009]

Question 116.13

Question: Are securities to be issued in an exchange exempt under Securities Act Section 3(a)(9) deemed outstanding for purposes of General Instruction I.B.3 of Form S-3?

Answer: Yes. [Feb. 27, 2009]

Question 116.14

Question: If an issuer meets the float test in General Instruction I.B.1 of Form S-3, may it use Form S-3 for secondary offerings, even though the securities to be issued are not listed on a national securities exchange or quoted on an automated quotation system of a national securities association, as required by General Instruction I.B.3?

Answer: Yes. [Feb. 27, 2009]

Question 116.15

Question: May parents, subsidiaries or affiliates of the issuer rely on Rule 415(a)(1)(i) to register secondary offerings?

Answer: Rule 415(a)(1)(i) excludes from the concept of secondary offerings sales by parents or subsidiaries of the issuer. Form S-3 does not specifically so state; however, as a practical matter, parents and most subsidiaries of an issuer would have enough of an identity of interest with the issuer so as not to be able to make "secondary" offerings of the issuer's securities. Aside from parents and subsidiaries, affiliates of issuers are not necessarily treated as being the alter egos of the issuers. Under appropriate circumstances, affiliates may make offerings that are deemed to be genuine secondaries. [Jan. 26, 2009]

Question 116.16

Question: The Skadden Arps/Registration of Rights Issuable Pursuant to Stockholder Rights Plans no-action letter (Jan. 7, 1987) issued by the Division relates to registration requirements in connection with rights plans. As described in the no-action letter, a prospectus to a previously effective Form S-3, pursuant to which sales are still being made, may be revised to reflect the rights plan by filing a Rule 424(c) prospectus supplement. For a Form S-8, Rule 428 would apply instead of Rule 424(c). However, if a company has an existing rights plan and is filing any new Securities Act registration statement for shares of the class of security to which the rights relate, should the rights be registered on the new registration statement as a separate security?

Answer: Yes. [Feb. 27, 2009]

Question 116.17

Question: Securities to be issued in connection with business combinations may be registered on a shelf filing pursuant to Rule 415(a)(l)(viii). May Form S-3 be used for these purposes?

Answer: No. Form S-3 is not available for business combinations. Form S-3 may be used for a secondary offering of shares which were originally received from the issuer in connection with a business combination, assuming it is a genuine secondary offering. [Feb. 27, 2009]

Question 116.18

Question: A company privately placed convertible securities in reliance on the exemption provided by Section 4(2). The company agreed to file a registration statement within two months after the private placement closing to register the resale of the common stock issuable on conversion of the convertible securities. The securities were convertible into common stock using a conversion ratio based on the company's common stock trading price at the time of conversion. Can the company use Form S-3 to register the resale of the common stock prior to conversion? Can the company use Rule 416 to register for resale an indeterminate number of shares that it may issue due to the operation of the conversion formula?

Answer: If the company satisfies the Form S-3 registrant eligibility requirements and the offering satisfies the Form's secondary offering requirements, the company may use Form S-3 to register, prior to the conversion, the resale of the common stock issuable upon conversion of the outstanding convertible securities. The company may not use Rule 416 to register for resale an indeterminate number of shares resulting from operation of the conversion formula. Rule 416 does not apply by its terms in these circumstances, because the floating conversion rate is not "similar" to an anti-dilution provision. Instead, the company must make a good-faith estimate of the maximum number of shares that it may issue on conversion to determine the number of shares to register for resale. If the number of registered shares is less than the actual number issued, the company must file a new registration statement to register the additional shares, assuming the selling securityholder desires to sell those additional shares. It may use Rule 462(b), if available, for this purpose.

The selling securityholder information in the registration statement, at the time of effectiveness, must include the total number of shares of common stock that each selling securityholder intends to sell (based on current market price if there is a floating conversion rate tied to market price), regardless of any contractual or other restriction on the number of securities a particular selling securityholder may own at any point in time. As the selling securityholders resell shares of common stock following conversion, the company must file prospectus supplements, as necessary, to update the disclosure of the number of shares that each selling securityholder intends to sell, reflecting prior resales. The plan of distribution in the prospectus filed as part of the registration statement must specify, in compliance with Item 508 of Regulation S-K, how each selling securityholder intends to dispose of the securities it receives on conversion. [Nov. 26, 2008]

Question 116.19

Question: A company privately placed convertible securities in reliance on the exemption provided by Section 4(2), but has not yet issued some or all of the convertible securities. The company agreed to file a registration statement within two months after the private placement closing to register the resale of the common stock issuable on conversion of the convertible securities. The securities were convertible into common stock using a conversion ratio based on the company's common stock trading price at the time of conversion. Can the company use Form S-3 to register the resale of the common stock prior to conversion?

Answer: Unless the transaction involving the issuance of the convertible security meets the conditions under which a company may file a registration statement for resale of privately placed securities before their actual issuance (commonly known as a "PIPE," or private-investment, public-equity transaction, as discussed below), the registration for resale of the common stock underlying the unissued convertible security would not be viewed as a valid secondary offering. Instead, the transaction would be treated as an indirect offering by the issuer, and thus a primary offering, with the investor being identified in the registration statement as an "underwriter." In such circumstances, the registration statement may not use the phrase "may be an underwriter." Instead, the disclosure in the registration statement must state that the investor "is an underwriter." As a result, the company may register on Form S-3 the resale of the underlying common stock, or the convertible security itself, only if the company is eligible to use that Form for a primary offering. In addition, if the company continues to sell privately additional convertible securities after it has filed the registration statement for the securities underlying the previously sold convertible securities, the continuation of the same offering may call into question the Section 4(2) exemption generally claimed for the entire convertible securities offering.

In a PIPE transaction, a company will be permitted to register the resale of securities prior to their issuance if the company has completed a Section 4(2)-exempt sale of the securities (or in the case of convertible securities, of the convertible security itself) to the investor, and the investor is at market risk at the time of filing of the resale registration statement. The investor must be irrevocably bound to purchase a set number of securities for a set purchase price that is not based on market price or a fluctuating ratio, either at the time of effectiveness of the resale registration statement or at any subsequent date. When a company attempts to register for resale shares of common stock underlying unissued, convertible securities, the PIPE analysis applies to the convertible security, not to the underlying common stock. There can be no conditions to closing that are within an investor's control or that an investor can cause not to be satisfied. For example, closing conditions in capital formation transactions relating to the market price of the company's securities or the investor's satisfactory completion of its due diligence on the company are unacceptable conditions. The closing of the private placement of the unissued securities must occur within a short time after the effectiveness of the resale registration statement. [Nov. 26, 2008]

Question 116.20

Question: An issuer intended to grant rights to subscribe to shares of common stock (on a pro rata basis to all shareholders) after it filed a registration statement on Form S-3. The issuer was not eligible to rely on General Instruction I.B.1 of Form S-3 because it did not have the requisite public float, and the aggregate amount of securities that the issuer intended to register exceeded the amount permitted pursuant to General Instruction I.B.6. Can the issuer rely on General Instruction I.B.4 to file a Form S-3 registration statement to cover the issuance of the shares on exercise of the rights prior to the time that the issuer granted the rights and without complying with the information provision requirements of that instruction?

Answer: No, the issuer could not rely on General Instruction I.B.4 to file the Form S-3 registration statement because the rights are not outstanding at the time of the filing of the registration statement, and the issuer would not be able to satisfy the requirement that an annual report and other disclosures be provided to the holders of the rights prior to the filing of the registration statement. Similarly, an issuer could not conduct a takedown of the securities off an effective unallocated shelf registration statement in reliance on General Instruction I.B.4 if the rights are not outstanding at the time of the takedown. The issuer could file a Form S-1 to register the rights offering if the offering would be made on a continuous basis in reliance on Rule 415(a)(1)(ix).

In addition, although General Instruction I.B.4 of Form F-3 does not have the same requirement to provide specified information to the holders of the rights, Form F-3 does require that the rights are outstanding at the time the registration statement is filed. Therefore, similar to Form S-3, foreign private issuers could not rely on General Instruction I.B.4 of Form F-3 to conduct such offerings. [Aug. 14, 2009]

Question 116.21

Question: How does a company register, as a primary offering (rather than as a "resale" registration in a private equity line financing), the issuance of the put securities under an equity line?

Answer: An equity line financing done as a primary offering in which the put price is based on or at a discount to the underlying stock's market price at the time of the put exercise is an "at the market" offering under Rule 415(a)(4) and must comply with the requirements of that rule. Further, to register the primary offering, the company must be eligible to register primary offerings on Form S-3 in reliance on General Instruction I.B.1 or General Instruction I.B.6 of such form or on Form F-3 in reliance on General Instruction I.B.1 or General Instruction I.B.5 of such form. In addition, if a company is relying on General Instruction I.B.6 of Form S-3 or on General Instruction I.B.5 of Form F-3, the total amount of securities issuable under the equity line agreement may represent no more than one-third of the company's public float at the time of execution of the equity line agreement. [Nov. 26, 2008]

Question 116.22

Question: May a company with an effective shelf registration statement on Form S-3, in reliance on General Instruction I.B.6, file a prospectus supplement for a new offering of an amount of securities that exceeds the 1/3 limit of the instruction, so long as the actual amount sold does not exceed the limit?

Answer: No. The capacity remaining under the 1/3 limit in General Instruction I.B.6 is measured immediately prior to the registered takedown and applies to the amount of securities offered for sale pursuant to the prospectus supplement, not the amount actually sold. The concept of rolling measurement dates is limited to different takedowns, not individual sales within a takedown. When measuring the amount available for a later takedown, only those securities actually sold are counted against the 1/3 limit. [Aug. 11, 2010]

Question 116.23

Question: A company is able to sell up to $10 million in securities using its effective shelf registration statement on Form S-3, in reliance on General Instruction I.B.6. On Monday, June 7, the company files a prospectus supplement to offer and sell up to $5 million of securities in a continuous offering. The company promptly begins its offering and has sold $2.5 million of securities to date. The company intends to file a prospectus supplement for another continuous offering on the following Monday, June 14. What is the maximum amount of securities that can be offered by the June 14 prospectus supplement, assuming the 1/3 limit in General Instruction I.B.6 continues to be $10 million?

Answer: The general rule is that, when measuring the amount available for a later takedown, only those securities actually sold are counted against the 1/3 limit. See Question 116.22. In the context of multiple, concurrent continuous offerings, however, any securities that continue to be offered in other continuous offerings in reliance on General Instruction I.B.6 would also count against the 1/3 limit. In this example, the company has sold $2.5 million of securities to date and therefore, as of June 14, can offer and sell up to $7.5 million of securities pursuant to General Instruction I.B.6. Because the company continues to offer up to $2.5 million of securities with the June 7 prospectus, it can only offer and sell up to $5 million of securities with the June 14 prospectus. To permit otherwise would allow a company to do in two or more transactions what it cannot do in one transaction. [Aug. 11, 2010]

Question 116.24

Question: In calculating whether the size of an offering consisting of common stock and warrants exceeds the one-third cap in General Instruction I.B.6(a) of Form S-3, is an issuer required to follow Instruction 2 to General Instruction I.B.6 when the warrants are not exercisable for common stock within 12 calendar months?

Answer: Yes.  Instruction 2 to General Instruction I.B.6 applies to calculating the market value of warrants for purposes of the one-third cap, even when the warrants are not exercisable for common stock within 12 months.  [May 16, 2013]

Question 116.25

Question: An issuer with less than $75 million in public float is eligible to use Form S-3 for a primary offering in reliance on Instruction I.B.6, which permits it to sell no more than one-third of its public float within a 12-month period. May it sell securities to the same investor(s), with a portion coming from a takedown from its shelf registration statement for which it is relying on Instruction I.B.6 and a portion coming from a separate private placement that it concurrently registers for resale on a separate Form S-3 in reliance on Instruction I.B.3, if the aggregate number of shares sold exceeds the Instruction I.B.6 limitation that would be available to the issuer at that time?

Answer: No. Because we believe that this offering structure evades the offering size limitations of Instruction I.B.6, the securities registered for resale on Form S-3 should be counted against the issuer’s available capacity under Instruction I.B.6. Accordingly, an issuer may not rely on Instruction I.B.3 to register the resale of the balance of the securities on Form S-3 unless it has sufficient capacity under Instruction I.B.6 to issue that amount of securities at the time of filing the resale registration statement. If it does not, it would need to either register the resale on Form S-1 or wait until it has sufficient capacity under that instruction to register the resale on Form S-3. [November 2, 2016]

Question 117.01

Question: May a majority-owned subsidiary of a parent that meets the registrant requirements of Form S-3 rely on General Instruction I.C.2 to use Form S-3 to register the offer and sale of investment grade debt if the subsidiary is not registered under the Exchange Act?

Answer: No. The subsidiary may use Form S-3 only after it voluntarily registers under the Exchange Act pursuant to an effective Form 10. The Form 10 must be filed prior to the filing of the Form S-3 and may be incorporated by reference pursuant to Form S-3, Item 12(a)(l) in substitution for the Form 10-K. The security that must be registered on the Form 10 is the registrant-subsidiary's common stock, and not the debt security registered on Form S-3. [Feb. 27, 2009]

Question 118.01

Question: In Part II of an automatic shelf registration statement, what information should be included under "Other Expenses of Issuance and Distribution"?

Answer: As with unallocated shelf registration statements, the information included under "Other Expenses of Issuance and Distribution" should include only the information that is known at the time of filing the registration statement. [Feb. 27, 2009]

Question 118.02

Question: If an automatic shelf registration statement initially registers one or more classes of securities and a new class of securities is subsequently added to that automatic shelf registration statement by post-effective amendment, when must the Exhibit 5 legality opinion for the new class of securities be filed? More generally, when must the Exhibit 5 legality opinion for the specific securities sold in a particular offering be filed?

Answer: An Exhibit 5 legality opinion must be filed at the time a class of securities is first included in an automatic shelf registration statement, whether as part of the initial registration statement or in a post-effective amendment to the registration statement. The signed opinion covering the specific securities sold in a particular offering must be filed as part of the registration statement or incorporated by reference into the registration statement no later than the closing date of the offering of such securities. This position is limited to opinions of counsel regarding the legality of the securities being offered, which are required to be filed in connection with shelf takedowns. [Aug. 14, 2009]

Question 118.03

Question: If a well-known seasoned issuer files an automatic shelf registration statement and during that year, before its Section 10(a)(3) update is due, the issuer loses its status as a well-known seasoned issuer, what is the impact on the effectiveness and use of that automatic shelf registration statement?

Answer: An issuer's loss of eligibility to use a registration form after effectiveness and before its Section 10(a)(3) update will not affect its ability to use that registration statement until the time of its Section 10(a)(3) update. If the issuer is no longer eligible as a well-known seasoned issuer at the time of its Section 10(a)(3) update, the rules would require the issuer to amend its automatic shelf registration statement onto the form it is then eligible to use to sell the securities. [Feb. 27, 2009]

Question 118.04

Question: How does Rule 3-10(g)(1)(ii) of Regulation S-X (which refers to the principal amount of securities being registered) apply in the context of an automatic shelf registration statement for an unspecified amount of securities?

Answer: As with a Form S-3 or Form F-3 unallocated shelf registration statement that includes subsidiary issuers or subsidiary guarantors, in the context of an automatic shelf registration statement, the determination of the principal amount of securities being registered for purposes of Rule 3-10(g)(1)(ii) of Regulation S-X would be based on the principal amount of the guaranteed securities being sold in the particular offering. [Feb. 27, 2009]

Question 118.05

Question: If a well-known seasoned issuer has an effective Form S-3 or Form F-3 registration statement, can it change that registration statement to an automatic shelf registration statement by filing a post-effective amendment?

Answer: No. If the issuer has an effective Form S-3 or Form F-3 that was not an automatic shelf registration statement when it became effective, it cannot amend that registration statement to become an automatic shelf registration statement. Instead, the issuer must file a new registration statement on Form S-3 or Form F-3 designated as an automatic shelf registration statement. When permitted by Rule 415(a)(6), the issuer may include on the new registration statement any unsold securities covered by the effective registration statement. Alternatively, the issuer may rely on Rule 457(p) to carry forward unused filing fees for unsold securities from the effective registration statement if the automatic shelf registration statement is filed within five years of the initial filing date of the effective registration statement. This approach is necessary because automatic shelf registration statements filed on Form S-3 or Form F-3 and post-effective amendments to automatic shelf registration statements will be designated separately, for EDGAR purposes, from other registration statements on Form S-3 or Form F-3 to enable them to become effective immediately. [Feb. 27, 2009]

Question 118.06

Question: Can a continuous offering registered on an effective Form S-3 (such as a dividend reinvestment program, including a program with a direct stock purchase plan) be transitioned to an automatic shelf registration statement?

Answer: Yes. When an issuer files an automatic shelf registration statement, it can register any primary offerings for cash, including continuous offerings that were previously registered on a shelf registration statement. This would include, without limitation, unallocated shelf offerings, dividend reinvestment programs with direct stock purchase plans, and offerings of securities by selling security holders. The issuer cannot include business combination transactions, such as acquisition shelf registration statements, on the automatic shelf registration statement.
 
When an issuer includes an ongoing offering that was registered on an effective shelf registration on a subsequently filed automatic shelf registration statement, it may include on the new registration statement any unsold securities covered by the effective registration statement when permitted by Rule 415(a)(6). Alternatively, it may carry forward the filing fees paid for any unsold securities under Rule 457(p) if the automatic shelf registration statement is filed within five years of the initial filing date of the effective registration statement. [Feb. 27, 2009]

Question 118.07

Question: May a majority-owned subsidiary of a well-known seasoned issuer parent use the parent's automatic shelf registration statement to register the subsidiary's guarantee of the parent's registered debt securities that are convertible into equity securities of the parent and not any other securities of the subsidiary, provided that the parent is eligible to register any of its securities on an automatic shelf registration statement?

Answer: Yes. General Instruction I.D of Form S-3 and General Instruction I.C of Form F-3 refer to guarantees of non-convertible securities, other than common stock, of the parent. However, each security would be analyzed separately and the form may be used to register the subsidiary's guarantee of the parent's registered debt securities that are convertible into equity securities of the parent and not any other securities of the subsidiary when the parent is primarily eligible as a well-known seasoned issuer to register any of its securities on the automatic shelf registration statement (and is not limited to registering only debt securities). [Feb. 27, 2009]

Question 118.08

Question: If a spun-off subsidiary meets the conditions discussed in Questions 8 and 9 of Staff Legal Bulletin No. 4, including the 12-month segment financial reporting requirement, that permit a subsidiary to consider the parent's reporting history when determining whether the subsidiary is eligible to use Form S-3, may the subsidiary rely on the parent's pre-spin-off reporting history for purposes of evaluating whether the subsidiary is a well-known seasoned issuer and eligible to file a Form S-3ASR?

Answer: Yes. The spun-off subsidiary also would need to independently meet all other requirements for well-known seasoned issuer status. It should be noted that if a spun-off entity relies on its parent's reporting history for purposes of filing a Form S-3 or a Form S-3ASR, it would need to comply with Items 308(a) and 308(b) of Regulation S-K in the first annual report that it files, to the extent its parent is required to do so. See Securities Act Release No. 8760 (Dec. 15, 2006), at fn. 76. [Jan. 26, 2009]

Question 118.09

Question: Must an issuer test its well-known seasoned issuer status when it adds a new class of securities to an existing automatic shelf registration statement on Form S-3 via post-effective amendment pursuant to Rule 413(b)?

Answer: No. When a well-known seasoned issuer adds a new class of securities to an existing automatic shelf registration statement on Form S-3 by filing a post-effective amendment pursuant to Rule 413(b), that filing is not itself an event requiring testing of well-known seasoned issuer status unless it also serves as a Section 10(a)(3) update. [Feb. 27, 2009]

Question 119.01

Question: Must a Form S-3 include a table of contents?

Answer: No. General Instruction II.B of Form S-3 expressly states that no table of contents is required to be included in the prospectus or in the registration statement prepared on the form, Part I, Item 2 of the form notwithstanding. [Feb. 27, 2009]

Question 119.02

Question: Rule 3-01 of Regulation S-X specifies certain time periods (depending on the registrant's accelerated filer status) in which a "filing," other than on Form 10-K or Form 10, may be made without the balance sheet for the most recent fiscal year end. The rule is conditioned on (1) the registrant's reasonable and good faith expectation that it will report income for the most recently completed fiscal year and (2) the registrant having reported income for at least one of the last two fiscal years. May a registrant sell securities from an effective Form S-3 registration statement during the relevant time period and file a prospectus supplement under Rule 424 to reflect the take-down, if the balance sheet for the most recent fiscal year end has not been filed and the registrant does not have a reasonable and good faith expectation that it will report income for the most recently completed fiscal year?

Answer: Yes. Rule 3-01 does not prevent the shelf take-down from occurring and would not apply to the prospectus supplement as it is not for the purpose of updating the prospectus under Section 10(a)(3). [Jan. 26, 2009]

Question 119.03

Question: May a company continue to use a registration statement that is predicated on timely filed reports (such as Form S-3) during the Rule 12b-25 extension period for a periodic report?

Answer: Rule 12b-25(d) provides that, during the extension period, a company "will not be eligible to use any registration statement form under the Securities Act the use of which is predicated on timely filed reports until the subject report is actually filed." The staff interprets the term "use" contained in the rule to mean that a company would not be eligible to file a new registration statement on Form S-3 until the subject report is filed within the extension period. The staff does not interpret the term to mean that the company cannot continue to use an already effective Form S-3 to make offers and sales during the extension period. Rather, the company's ability to continue to make such offers or sales will depend on whether it determines that the prospectus included in the Form S-3 is a valid Section 10(a) prospectus and there are no Section 12(a)(2) or anti-fraud concerns with the prospectus. If the company determines that it does not have a valid Section 10(a) prospectus, it should cease making any offers or sales under the registration statement that includes that prospectus. [September 30, 2008]

Question 120.01

Question: May a dividend reinvestment plan prospectus, which will not be distributed on a preliminary basis, bear the anticipated effective date of the registration statement to permit savings in printing costs?

Answer: Yes. [Feb. 27, 2009]

Question 120.02

Question: Does the language in General Instruction III to Form S-3 relating to advance processing of confidential treatment requests and reduced numbers of extra copies to be filed apply to all offerings?

Answer: No. The language in General Instruction III applies only to offerings made for dividend or interest reinvestment plans. [Feb. 27, 2009]