In a “continuous offer,” securities are offered immediately after the registration statement (within two days) and continue to be offered from that date. The term “continuous” applies only to securities offerings and not to the sale of securities, as sales may be sporadic during the duration of the continuous offer. Registration filing agreements for shelf resale can be an important part of a venture capital fund`s exit strategy. When a venture capital fund invests in a private company, the company often agrees, at the time of the investment, to file one or more shelf registration statements on form S-3 for the venture capital fund after the close of the IPO. This agreement provides liquidity for the venture capital fund`s investment. A WKSI may, for the most part, make unlimited sales of its registration statement and omit the necessary information contained in the prospectus presented on Form S-3 in a forward-looking supplement at the time of the offer. If the WKSI chooses to do so, it may submit the necessary disclosure at the time of the offer in a 1934 act report, for example. B an updated report on Form 8-K, which would automatically be included in the reference registration statement. A WKSI may also pay an SEC registration fee on a pay-as-you-go basis and not at the time of first registration. Companies often use S-3 recording snippets for shelf recordings, as described above in this chapter. One of the main advantages of shelf registration is that after the S-3 registration statement comes into effect, a shelf removal generally does not require SEC authorization. This speeds up securities issuance and reduces total costs. A company can use its registration statement on Form S-3 for future offers for three years.
After three years, an entity can transfer SEC commissions on unsold securities on a new shelf registration statement. In July 2005, the SEC used applications for automatic registration. This bid is a relaxed registration process that applies to known and experienced issuers (WKSI, pronounced “wiksy”) and includes, among other things, bonds, common shares, preferred shares and warrants. A WKSI is a company that has submitted all annual, quarterly and current reports in a timely manner, either with a market capitalization of more than $700 million or spent $1 billion on bonds over the past three years. The registration of shelves is generally made available to companies that are considered reliable by the securities regulator of the country concerned. Because of their targeted temporary nature, shelf offerings are subject to much less scrutiny by these authorities than standard stock exchanges. The recording of the shelves is a recording of a new edition that can be prepared up to three years in advance so that the issue can be offered quickly as soon as funds are needed or market conditions are favourable. For example, current housing market conditions are not favourable for a given company to give an IPO.
In this case, this may not be the right time for an industry company (for example). B a home builder) to present its second offer, given that many investors will be pessimistic about companies active in this sector. By using shelf registration, the company can pre-complete all registration procedures and quickly enter the market if conditions become more favourable.