4.1.2.2. Shelf Offering
In most public offerings, an issuer will register and issue a specified number of securities and will attempt to sell all the securities in one day. An alternative is to file a shelf registration and conduct a shelf offering. A shelf registration is a registration statement filed for a large number of securities, which the issuer does not intend to sell immediately. Instead, the issuer puts the securities “on a shelf” and “takes them down” to sell when the market is favorable. A shelf registration may be used for either equity or debt securities. An offering made using a shelf registration is called a shelf offering, and the portion of a shelf offering being taken down off the shelf at a particular time is sometimes referred to as a takedown.
A shelf registration is an exception to the normal rule that the preliminary prospectus must contain everything in the final prospectus except for the price. A shelf registration is permitted to omit information that is unknown or not reasonably available at the time of filing. However, before the issuer may perform any takedowns, it must amend the registration statement to include this information. This amendment also specifies the pricing to be used for the takedown.
As a result, when the securities are taken down off the shelf to sell, the issuer must distribute both the preliminary prospectus from the original shelf registration statement (called the base prospectus) and the newly filed amendments to Part I of the registration statement (called the prospectus supplement). The prospectus supplement contains information specific to the takedown, whereas the base prospectus applies to the shelf registration as a whole. You can think of the base and supplement together as being like a final prospectus.
A shelf offering may take place over a longer-than-normal offering period, or an offering period that begins well after the effective date of the registration statement. A continu