SEC Staff Issues C&DI On Form S-3 Transaction Requirements

On November 2, 2016, the Staff of the Division of Corporation Finance of the U.S. Securities and Exchange Commission (SEC) issued new guidance in the form of Compliance and Disclosure Interpretation Question 116.25 (C&DI 116.25). C&DI 116.25 states the Staff’s position regarding the eligibility of an issuer with a public float of less than $75 million to concurrently use (i) a Form S-3 registration statement for a primary offering in reliance on Instruction I.B.6 of Form S-3 and (ii) a separate Form S-3 registration statement for a secondary offering in reliance on Instruction I.B.3 of Form S-3.

The Form S-3 instructions set forth certain transaction requirements that must be met in order for an issuer to use Form S-3. If these are not met, the issuer would instead have to use Form S-1 to register its securities, which, for a variety of reasons, is more burdensome for an issuer than Form S-3. One of these transaction requirements is found in Instruction I.B.6,