The Shelf Registration Process

Abstract

This note covers U.S. SEC Rule 415, more widely known as shelf registration. It briefly discusses the rationale and historical origins of the rule in 1982 and then discusses several reforms—the introduction of universal registration statements in 1992 and well-known seasoned issuers in 2005—which have greatly expanded shelf-registered equity issuance. The more frequent use of shelf registration has led to the development of alternative methods of selling seasoned or follow-on equity offers, such as fully marketed offers, accelerated book building offers, and overnight offers. Excerpt UVA-F-1701 Rev. Nov. 19, 2015 The Shelf Registration Process Over the past several decades, most financial regulatory bodies have recognized that investors differ in their need for financial information and their abilities to acquire and process it. Regulators should ideally focus their attention on issuers (and their respective security offerings) that investors know little about and limit their scrutiny of issuers that already provide extensive disclosure and are well known to investors. Accordingly, in the United States and other developed countries, initial public offerings receive the greatest scrutiny and require the most complete disclosure of information. But as firms grow larger and become more frequent issuers in the capital markets, the regulatory requirements and oversight are typically reduced. The easing of restrictions on larger and better known issuers is commonplace across many countries but all these regulations have their origins in Securities and Exchange Commission (SEC) Rule 415. This note provides a brief historical review the origins of Rule 415, or as it is more widely known as shelf registration, and some of the important revisions to it that have increased its use over time. The more frequent use of shelf registration has led to the development of alternative methods of selling seasoned or follow-on equity offers, such as fully marketed offers, accelerated book building offers, and overnight offers. . . .