Shelf offerings are a public offering of securities where the issuer can make multiple offerings based on the same prospectus, known as the core prospectus, as opposed to filing a new registration statement with every offering. Also referred to as “shelf registration.” The term “shelf offering” derives from the notion that the securities are available for the issuer to offer whenever they want to take them down from the shelf. That is, the issuer may issue a portion of the securities at the time they file the core prospectus and issue the remaining securities later without filing a new prospectus.
Generally, under Section 5 of the Securities Act, an issuer must file a registration statement to offer any securities to the public. Rule 415 of the Securities Act, however, provides, “securities may be registered for an offering to be made on a continuous or delayed basis in the future.” That is, Rule 415 creates a carve-out from Section 5’s requirement that issuers must file a registration statement to offer securities by allowing issuers to offer securities continuously in the future based on a single prospectus. Only seasoned issuers and well-known seasoned issuers are eligible for shelf registrations. Most shelf offerings are done with SEC Form S-3.
The primary advantages of shelf offerings are timing and certainty. Issuers can issue their securities when market conditions are optimal, and do not have to wait for extensive SEC review after they file their core prospectus. The core prospectus also prospectively incorporates by reference the issuer’s periodic reports, meaning the issuer does not need to amend the core prospectus in the event of material developments. Section 11 still applies to subsequent issues in a shelf offering though, so the issuer must be sure that any material developments are included in disclosures incorporated by reference or file a supplemental prospectus.
Find more information on shelf offerings here.
[Last updated in January of 2022 by the Wex Definitions Team]