Shelf Registration

By Dennis McCarthy – (213) 222-8260 –

Welcome to the Equity Series – Raising Equity for Small Cap Public Companies

This particular video addresses why your company should consider using a shelf registration statement and what’s involved.

In my video “How to Get the Best Deal“, I said that to get the best deal, a small cap public company needing equity should plan ahead and file a shelf registration because it permits the company to be opportunistic and sell equity immediately when conditions are favorable to the company.

The securities that are sold to investors under a shelf registration are “public” securities tradable by the purchaser without further SEC registration.

This type of “public” security appeals to a very big universe of potential investors which should enable the offering company to get the good terms without a restricted security discount.

But what’s involved in a shelf registration?

The first step to a shelf registration requires a small cap public company to file with the SEC, Securities Exchange Commission, a document that incorporates or “refers to” all the company’s SEC filings and describes the types of securities it might offer within a three year period, which is the life of the shelf.

A public company, traded on one of the exchanges or on NASDAQ and current in its periodic filings, annual report and quarterlies, can file a shelf registration statement with the SEC.

To be usable, a shelf registration must be declared effective by the SEC.  Granting effectiveness, by the way, is not a sign of approval by the SEC.

To keep the shelf available, a company must keep current its periodic filings.

Also, in a shelf registration, the company doesn’t typically specify (i) when it will offer the securities, (ii) what type of security it will offer, (iii) how much money it plans to raise, and (iv) which broker-dealer will be involved.

So while it’s publicly visible that the company has filed a shelf registration, there are a lot of key facts, which are unknown to investors.

In the past, many small cap public companies feared that a shelf registration would signal to investors that the company was planning to conduct offerings and this would depress the company’s stock price.

Now, that fear has diminished substantially because companies and investors recognize that having a shelf registration available is simply a prudent corporate move to permit efficient and fast public offerings.

There are several videos on the use of a shelf registration so I’ll leave this discussion here.

Please contact me to help your company to raise equity or complete other capital market projects.