Blog Public Company Advisory Blog February 22, 2022

Navigating Loss of WKSI Status on 10-K Filing Date

Given the volatility in the capital markets and potentially due to other changes, a company may face the prospect of losing its status as a well-known seasoned issuer (WKSI) at the time of the filing of its 10-K. One of the requirements for WKSI status that many companies attempt to satisfy is having common equity public float of at least $700 million as of a “determination date.” In the context of filing a 10-K, the determination date is any date within 60 days prior to the filing of its 10-K. If a company does not meet the definition of a WKSI on at least one day that is within 60 days prior to the filing of its 10-K, it will not be considered a WKSI at the time of the filing of its 10-K.

A company that has an effective automatic shelf registration statement and does not qualify as a WKSI at the time of the filing of its 10-K, will no longer be eligible to use such registration statement because it will not be able to rely on General Instruction I.D to Form S-3. Fortunately, the SEC Staff has set forth a relatively straightforward process for a company to follow in this situation so that it may continue to offer and sell securities off of its existing automatic shelf registration statement pending the effectiveness of the post-effective amendment that the company will need to file in order to convert the registration statement from an automatic shelf registration statement to a non-automatic shelf registration statement.

Specifically, in Securities Act Rules Compliance and Disclosure Interpretation 198.06, the SEC Staff set forth the following process to follow so that a company can continue to offer and sell securities using its existing automatic shelf registration statement:

  • Prior to filing the Form 10-K, the company must file a post-effective amendment to the automatic shelf registration statement (on EDGAR submission type POSASR) to register a specific amount of securities and to pay the associated filing fee;
  • The prospectus included in the post-effective amendment to the automatic shelf registration statement may not omit information in reliance on provisions of Rule 430B that are available only to automatic shelf registration statements and instead must contain all information required to be included in a Form S-3 filed in reliance on General Instruction I.B.1 or I.B.2;
  • The company must remain eligible to use Form S-3 in reliance on General Instruction I.B.1 or I.B.2 at the time of the filing of the Form 10-K; and
  • At least promptly after the Form 10-K is filed, the company must file either a post-effective amendment using EDGAR submission type POS AM or a new Form S-3 registration statement using EDGAR submission type S-3 to convert the Form S-3 to the proper EDGAR submission type for a non-automatic shelf registration statement.

Pending the effectiveness of the filing of the post-effective amendment, the company may continue to offer and sell securities using the amended automatic shelf registration statement. Note that even though the above process only references Form S-3 and Form 10-K, we believe that a company that qualifies as a “foreign private issuer” that faces loss of WKSI status upon the filing of its Form 20-F can also rely on this process.

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