November 24, 2008

Corp Fin Issues Last-Minute Guidance on Expiring Shelf Registration Statements

On Friday, the Corp Fin Staff put out some much needed guidance on dealing with the upcoming expiration of registration statements under the 3-year shelf sunset provision in Securities Act Rule 415(a)(5). The guidance confirms that for all of those “grandfathered” shelf registration statements out there – i.e., those registration statements that were effective prior to the December 1, 2005 effective date of the Securities Offering Reform amendments – the deadline for filing a new registration statement to replace an expiring shelf is this Friday, November 28th. This deadline is critical for any companies (particularly non-WKSIs) that want to maintain the flexibility to stay in the market with their expiring shelf for up to six months while the replacement registration statement is pending.

The guidance provides some important tips on dealing with the process for carrying over unsold securities from the expiring shelf to the replacement shelf, including that only the same class of securities can be carried over from the expiring shelf to the replacement shelf. If any amounts are sold off of the expiring shelf while the replacement shelf is pending, the company must file a pre-effective amendment to the replacement shelf reflecting the reduced amount of securities carried forward.

As noted in the guidance, filing fees can be tricky when filing a replacement shelf, because the EDGAR system won’t accept a Securities Act registration statement (other than an automatic shelf registration statement relying on “pay-as-you go”) unless some amount is included in the “Proposed Maximum Aggregate Offering Price” header tag. The Staff says that an issuer relying on Rule 415(a)(6) to carry over unused securities should specify “$1.00” in the “Proposed Maximum Aggregate Offering Price” header tag and “$0” as the fee paid. This problem goes away if the company is registering new securities transactions on the replacement shelf, in which case only the amount of the new securities need be included in the “Proposed Maximum Aggregate Offering Price” header tag and the fee due on those additional securities must be paid.

The Staff’s guidance points out the perils of seeking to rely on Rule 457(p) instead of Rule 415(a)(6) when carrying over fees. The Staff notes that if Rule 457(p) is used instead of Rule 415(a)(6) to pull forward fees from an expiring registration statement, the securities from the expiring registration statement will be deemed deregistered upon the filing of the replacement shelf, and thus can’t be sold while the replacement shelf is pending.

As we noted in the September-October issue of The Corporate Counsel, some issuers are finding themselves coming up to the 3-year shelf sunset deadline without their WKSI status. The Staff notes that a company can continue to use an expiring ASR and available WKSI exemptions even if the company is forced to file a non-automatic replacement shelf because it no longer qualifies as a WKSI, at least until the company’s Section 10(a)(3) update comes around. Thanks to Dave for writing this analysis!

Changing from Lawyer to Proxy Solicitor

In this podcast, Rhonda Brauer of Georgeson discusses her new gig at Georgeson, which she joined several months ago after a lengthy stint as an in-house lawyer at the NY Times, including:

– How do you like your new job so far?
– How did Georgeson find you?
– What tasks are you performing so far?
– How will that evolve?

More Conference Performance Art

I spoke a number of times last week – and took the opportunity to tape a few more works of art. Thanks to Dick Johnson for blogging about my Kansas City presentation.

Falling Down in Chicago (A True Dork)

Live from Kansas City! (“Saturday Night Live” Parody)

– Broc Romanek