How to Use Rule 415(a)(6) to Carry Forward Securities
A look at the requirements for using Rule 415(a)(6) to preserve offering continuity by carrying forward securities from an expiring shelf registration.
Companies that plan to issue securities to the public often use a process known as a shelf registration. This method, governed by the Securities and Exchange Commission’s (SEC) Rule 415, allows an issuer to register a quantity of securities for future issuance without having to file a separate registration for each individual offering. This provides significant flexibility, enabling companies to access capital markets quickly when conditions are favorable.
A primary feature of a shelf registration is its limited lifespan. Under SEC Rule 415(a)(5), the securities registered on a shelf can only be offered and sold for three years after the initial effective date of the registration statement. To address this, the SEC provides a specific mechanism, Rule 415(a)(6), which allows for the seamless continuation of the offering by carrying forward the unsold securities and associated filing fees to a new registration statement.
Eligibility Requirements for Rule 415(a)(6)
The primary trigger for using Rule 415(a)(6) is the three-year expiration date mandated by Rule 415(a)(5). This rule establishes that a shelf registration statement has a finite life, creating a hard deadline for issuers who have not sold all the securities covered by their registration. To maintain the ability to offer these remaining securities, a company must take proactive steps before this expiration occurs.
To qualify for the carry-forward provision, the new registration statement must be filed with the SEC no later than the expiration date of the existing registration statement. This timing is a strict requirement; if the new filing is made even one day after the prior one expires, the ability to carry forward the unsold securities and fees is lost. During the period between the filing of the new statement and its effectiveness, Rule 415(a)(5) provides a grace period allowing the company to continue selling securities under the old registration statement.
A condition for using Rule 415(a)(6) is that the new registration statement must cover offerings of the same class of securities as the prior statement. The new filing essentially replaces the old one, allowing for the continued offering of the specific securities that were left unsold. If any of these carried-forward securities are sold under the old registration during the grace period, the company must file a pre-effective amendment to the new registration to update the final amount of securities being officially moved.
Required Undertakings in the New Registration Statement
When preparing the new registration statement, an issuer must include specific declarations, known as undertakings, to properly link the new filing to the expiring one. These undertakings are formal statements made to the SEC within the registration document itself, creating a clear and legally binding record of the transition.
The issuer must state that the new registration statement constitutes the successor filing to the prior, expiring one. This includes identifying the file number of the prior registration statement and its initial effective date, which creates a direct audit trail between the two documents. Furthermore, the undertakings must include a declaration that any unsold securities from the prior registration statement are now being carried forward and included in the new one.
Finally, the issuer must undertake that the offering of any unsold securities under the prior registration statement will be deemed terminated as of the date the new registration statement becomes effective. This commitment prevents the possibility of securities being simultaneously registered on two different active statements. This undertaking ensures a clean cut-off, clarifying that once the new shelf is active, the old one is officially closed for any further sales.
Filing Mechanics and Fee Calculation
On the cover page of the new registration statement, or within the accompanying fee table, the issuer must clearly identify the quantity of unsold securities being carried forward. It must also list the dollar amount of filing fees previously paid that are attributable to those specific unsold securities to receive a fee credit. Modern SEC filing systems, such as the EDGAR system, have structured data requirements for this process, and filers often use tools like the Fee Exhibit Preparation Tool (FEPT) to properly format this information.
The fee table will have separate lines distinguishing between newly registered securities and the carry-forward securities. For the carry-forward securities, the table will reference Rule 415(a)(6) and include details from the prior registration, such as its file number and effective date, to validate the transfer of both the securities and the associated fees.
After the new registration statement containing these details is submitted and becomes effective, one final step is required. The company must file a post-effective amendment to the original, now-expired registration statement. The sole purpose of this amendment is to formally deregister all the unsold securities that were carried forward to the new filing. This action officially removes them from the old shelf and confirms that the offering authority from the prior statement has been terminated, as promised in the undertakings of the new filing.