Depending on which of the above categories an issuer falls into, it may be granted more or less flexibility with regard to its shelf registrations. With some exceptions, the ability to conduct delayed offerings is limited to those eligible to use Form S-3, whereas continuous offerings are more widely available.
A shelf registration expires either two or three years after the effective date. The timeframe is three years for shelf registrations submitted through Form S-3, and two years for issuers who must use the more exacting Form S-1.
Another advantage of being able to file a shelf registration using Form S-3 instead of Form S-1 is the ability to conduct an at-the-market offering. An at-the-market offering is one in which securities may be sold at whatever the market price is at the time of the sale. An at-the-market offering merely introduces into the market new shares of an existing class of shares. It allows an issuer to dribble these shares into the market and, in so doing, hopefully minimize the impact on the security’s share price. Because they do not require management to go on road shows to sell the securities, at-the-market offerings are typically lower cost and require less management involvement than traditional follow-on offerings. At-the-market offerings tend to be smaller than follow-on offerings and therefore raise less money for the issuer. They tend to be used by issuers that need to regularly raise small amounts of capital.
When a WKSI files a shelf registration on Form S-3, it becomes effective immediately upon filing, rather than waiting for SEC review. This is known as an automatic shelf registration.
