Helping Companies With Registered Offerings
Our firm can assist in all manners of registered follow-on offerings whether a best efforts offering, firm commitment, utilizing an S-1 or F-1; creating a shelf on Forms S-3 or F-3 or take-downs off your shelf such as registered direct offerings and CMPO’s we are the right counsel for you.
Form S-1
This form registers securities for all companies where no other form is authorized or prescribed. Form S-1 can be used to register new securities for sale or the resale of outstanding securities such as in a PIPE transaction. Generally, a company will register an offering on Form S-1 when S-3 is unavailable or where the company does not have sufficient capacity for a take-down on a Form S-3 due to the “baby shelf” rules under Instruction I.B.6 to Form S-3.
Form S-1 can be used to register any form of offering except a CMPO, which by nature is confidentially marketed and thus requires use of an S-3 prospectus supplement for timely completion. Although a Form S-1 is often used in a PIPE transaction, recently many underwriters have assisted company’s with completing follow-on best efforts offerings using Form S-1.
Form F-1
This form is used for the registration of securities by foreign private issuers where no other form of registration is authorized or prescribed. Form F-1 can be used to register new securities for sale or the resale of outstanding protection in the hands of existing shareholders. Generally, a company will register an offering on Form F-1 when F-3 is unavailable or where the company does not have sufficient capacity for a take-down on a Form F-3 due to the “baby shelf” rules under Instruction I.B.5 to Form F-3.
Forms S-3 And F-3
These forms are shorter form registration statements that can be used as “shelf registrations” for certain transactions by eligible companies. Form S-3 is the form of shelf registration statement for domestic issuers and Form F-3 is used by foreign private issuers.
Registered Direct Offering (RDO)
A registered direct offering (RDO) is a type of public offering using a shelf registration statement. In a registered direct offering, the company offers and sells securities to a small group of investors on a best efforts basis. The securities are registered via a take down from a shelf registration statement on Form S-3 or F-3. Although an RDO is registered, it is usually not considered a “public offering” for purposes of the Nasdaq or NYSE/NYSE American 20% rule and as such if the offering will involve in excess of 20% dilution, prior shareholder approval must be obtained. Most offerings are structured to contain a hard 19.99% cap on dilution until after shareholder approval has been obtained. For more on the 20% rule see https://securities-law-blog.com/2019/05/14/the-20-rule-private-placements/?hilite=20%25.
Confidentially Marketed Public Offering (CMPO)
A confidentially marketed public offering (CMPO) is a type of takedown from a shelf registration that involves speedy takedowns when market opportunities present themselves (for example, on heavy volume). A CMPO is completed on a firm commitment basis and is almost always considered a public offering for purposes of analysis of the 20% rule.
In a typical CMPO, an underwriter confidentially markets takedowns of an effective S-3 shelf registration statement to a small number of institutional investors (lead investors). The underwriter will not disclose the name of the issuing company until the institutional investor agrees that they have a firm interest in receiving confidential information and agrees not to trade in such company’s securities until the offering is either completed or abandoned.
When an investor confirms their interest, the company and its banker will negotiate the terms of the offering with the investor(s), including amount, price (generally a discount to market price), warrant coverage and terms of such warrant coverage. The disclosure of the name of the issuer and confidential information related to the offering is referred to as bringing the investor “over the wall.” Once brought over the wall, the potential investor(s) will complete due diligence. This process is completed on a confidential basis.
The underwriter then broadly markets the offering to retail investors over a very short period of time (often one or two days) and a closing is completed.
Navigate These Complex Requirements With Our Help
Registered offerings can often come with complex and stringent regulatory standards as well as require an indepth knowledge of current market conditions. Because of this, companies must make sure they collaborate with the right lawyers with the right experience. Schedule an initial consultation with us today by calling 877-541-3263 or emailing us through our contact form.