612.01 Rule 415(a)(1)(vii) permits a delayed or continuous offering in the case of mortgage-related securities. Although the Securities Act and the rules thereunder do not define mortgage-related securities, the Exchange Act was amended to provide such a definition in Section 3(a)(41). Because the term in Rule 415 was intended to have the same meaning as ultimately decided upon by Congress, a security meeting the definition in Exchange Act Section 3(a)(41) will also be deemed to be a mortgage-related security for purposes of Rule 415. In the case of a traditional mortgage-related securities offering which does not fall within the definition, consideration should be given to whether another subsection of Rule 415(a)(1) is available, for example, Rule 415(a)(1)(ix) or (x). Securities offerings registered in reliance on Rule 415(a)(i)(ix), unlike those registered in reliance on subsections (vii) and (x), are subject to the two-year limitation of Rule 415(a)(2), unless registered on Form S-3 or Form F-3. [Jan. 26, 2009]

612.02 An insurance company acquired 55% of the common stock of a company in a private transaction. It now holds these restricted securities as a reserve against claims. As the result of an annual state inspection, the insurance company has been questioned regarding the sufficiency of its reserves. In order to enhance the value of the restricted securities, it wishes to have them registered. Any registration statement filed for this purpose would be governed by Rule 415 because the insurance company may not intend to sell the securities immediately. Since the issuer would be deemed a subsidiary of the insurance company, it would be unable to rely upon Rule 415(a)(1)(i). Therefore, another paragraph of Rule 415(a)(1) would have to be available in order to register the offering on a delayed or continuous basis. [Jan. 26, 2009]

612.03 An issuer that is not eligible to register a delayed primary offering on Form S-3 pursuant to Instruction I.B.1. of the form intends to conduct a rights offering for 30 days. Following that time, the shares not subscribed for will be sold in a firm commitment underwriting. The offering may be made in reliance on Rule 415(a)(1)(ix). Item 512(c) of Regulation S-K contemplates this result. [Jan. 26, 2009]

612.04 In the case of a registration statement pertaining to an offering of convertible debentures and the common stock underlying the debentures, Rule 415 typically is not applicable to the continuous offering of the underlying common stock because that offering is exempt from registration pursuant to Section 3(a)(9). In cases when the Section 3(a)(9) exemption is unavailable (for example, when securities are convertible into securities of another issuer, when conversion terms require that the shareholder pay consideration at the time of conversion, or when conversion arrangements involve the payment of compensation for soliciting the exchange), absent another exemption, Rule 415(a)(1)(iv) is applicable. Rule 415 applies to registered offerings made on a delayed or continuous basis. [Jan. 26, 2009]

612.05 A registrant files a Form S-3 shelf registration statement for the delayed sale of debentures. Depending upon the level of interest rates at the time the offering actually takes place, the registrant may seek an opinion of California counsel to the effect that the offering does not violate the California usury laws. Such an opinion may be filed as an exhibit to a Form 8-K, since such forms are automatically incorporated by reference into Form S-3 registration statements. [Jan. 26, 2009]

612.06 An issuer with an effective acquisition shelf registration statement may follow the procedures described in Securities Act Release No. 6578 (Apr. 23, 1985) and the Service Corporation International interpretive letter (Oct. 31, 1985) issued by the Division to update the registration statement for use in subsequent acquisitions. [Jan. 26, 2009]

612.07 Questions have arisen concerning the application of Rule 415 to medium term note offerings. Many of these offerings begin promptly and are made on a continuous basis in reliance on Rule 415(a)(1)(ix). Others, however, are made on a delayed basis in reliance on Rule 415(a)(1)(x) since they do not begin promptly after effectiveness, but are continuous in nature once begun. An issuer eligible to rely on Rule 415(a)(1)(x) may file one registration statement that covers several immediate, continuous or delayed offerings, each a different program for a new series of notes. [Jan. 26, 2009]

612.08 A Rule 415 offering provides that purchasers within the first 60 days will receive a security with a higher yield than that to be received by subsequent purchasers. The registrant wished to extend the preferential purchase period for an additional 30 days. The Division staff has taken the position that such an extension is a material change in the plan of distribution, which according to the Item 512(a)(iii) undertaking would require a post-effective amendment (or, for registration statements on Form S-3 or F-3, compliance with one of the methods in Item 512(a)(1)(B)). [July 3, 2008]

612.09 It is important to identify whether a purported secondary offering is really a primary offering, i.e., the selling shareholders are actually underwriters selling on behalf of an issuer. Underwriter status may involve additional disclosure, including an acknowledgment of the seller’s prospectus delivery requirements. In an offering involving Rule 415 or Form S-3, if the offering is deemed to be on behalf of the issuer, the Rule and Form in some cases will be unavailable (e.g., because of the Form S-3 “public float” test for a primary offering, or because Rule 415(a)(1)(i) is available for secondary offerings, but primary offerings must meet the requirements of one of the other subsections of Rule 415). The question of whether an offering styled a secondary one is really on behalf of the issuer is a difficult factual one, not merely a question of who receives the proceeds. Consideration should be given to how long the selling shareholders have held the shares, the circumstances under which they received them, their relationship to the issuer, the amount of shares involved, whether the sellers are in the business of underwriting securities, and finally, whether under all the circumstances it appears that the seller is acting as a conduit for the issuer. [Jan. 26, 2009]

612.10 The registrant filed a registration statement on Form S-11 relating to a “shelf” offering of mortgage backed bonds to be issued in series. The registrant was informed that it would not be necessary to file post-effective amendments and supplemental indentures each time a new series of bonds was to be issued. The response was conditioned upon two factors:

This position is consistent with Instruction 1 to Item 601(a) of Regulation S-K. When a registrant does not satisfy these conditions, supplemental indentures and amended underwriting agreements may be filed only by post-effective amendment and not as exhibits to a Form 8-K. The reason is that Form S-11 does not permit incorporation by reference to subsequently filed Exchange Act reports, such as a Form 8-K. [Jan. 26, 2009]

612.11 Securities to be issued in connection with business combinations may be registered for the shelf pursuant to Rule 415(a)(1)(viii). While this rule does not limit the Securities Act registration form used, not all forms are available for business combinations. In particular, Form S-3 is not available for business combinations of any kind. The “for cash” proviso in General Instruction I.B.1 of Form S-3 is interpreted as prohibiting the use of the form not only for third-party exchange offers but also for any other business combination, however structured. See Securities Act Release No. 6534 (May 9, 1984), at fn. 14. Form S-3 may be used for a secondary offering of shares which were originally received from the issuer in connection with a business combination, assuming it is a genuine secondary offering. [Jan. 26, 2009]

612.12 A controlling person of an issuer owns a 73% block. That person will sell the block in a registered “at-the-market” equity offering. Rule 415(a)(4) applies only to offerings by or on behalf of the registrant. A secondary offering by a control person that is not deemed to be by or on behalf of the registrant is not restricted by Rule 415(a)(4). [Jan. 26, 2009]

612.13 Pursuant to a shelf registration statement, from time to time a company issues securities through a firm commitment underwriting at a fixed price based on the prior day’s closing price. These firm commitment takedowns would not be considered “at the market offerings” because they are at a fixed price. However, sales into an existing trading market of securities of the same class made by broker-dealer firms who buy securities in such takedowns may be deemed indirect primary offerings made “at the market” within the meaning of Rule 415(a)(4), thereby triggering registration and prospectus delivery requirements. [Jan. 26, 2009]

612.14 In exchange for “consulting services,” a private operating company intended to sell about 13 percent of its stock to a public company whose sole business was providing consulting services. The consulting services involved preparing a registration statement, applying for listing, obtaining market makers and several other services related to developing a market or raising capital. The public company intended to distribute about half of the 13 percent of the operating company stock it would receive to its stockholders as a “dividend” through a “spin-off.” It also wanted to register the rest of the stock it would receive for resale pursuant to Rule 415(a)(1)(i). The transaction is a primary offering of the operating company through the public company and its shareholders and the registration statement would need to cover the entire distribution of these shares and the dividend shares, including their further distribution to the public. The registration statement would need to name the public company and its shareholders as underwriters and include appropriate disclosure about them, such as the information described in Item 507 of Regulation S-K. In addition, because the operating company was not eligible to do an at the market offering on a primary basis pursuant to Rule 415(a)(4), the securities offered and sold pursuant to the registration statement would have to be offered and sold at a fixed price for the duration of the offering. [Jan. 26, 2009]

612.15 A company with minimal operations (parent company) and about 750 shareholders intended to create a subsidiary with no significant operations and spin it off to its shareholders, immediately after which the subsidiary would merge with a private operating company that has about 20 shareholders. After the merger, about 95 percent of the equity of the merged entity would be owned by former shareholders of the operating company, about four percent would be owned by the shareholders of the parent company, and about one percent would by owned by some insiders of the parent company who would receive stock in the operating company as a finder’s fee in connection with structuring the transaction. It was contemplated that Securities Act registration statements covering the shares to be issued in the spin-off and the merger would be filed. In addition, after the merger some insiders of the parent company would sell shares of the merged entity that they would receive due to the spin-off and due to the exchange of the finder’s fee shares in the merger.

Based on these facts, the transaction is a primary offering of the operating company through the parent company and its shareholders. As such, rather than registering parts of this transaction (i.e., the spin-off and merger), the entire distribution of the operating company shares to the public would need to be registered as a primary offering. The registration statement would have to name the parent company and its shareholders as underwriters, and include appropriate disclosure about them, such as the information described in Item 507 of Regulation S-K. In addition, because the operating company was not eligible to do an at the market offering on a primary basis pursuant to Rule 415(a)(4), the registration statement would have to include a fixed price for the duration of the offering. [Jan. 26, 2009]

612.16 A real estate investment trust utilizes an UPREIT structure whereby the REIT is the general partner of a limited partnership that holds all of the REIT’s properties. Limited partners of the limited partnership may elect to convert their limited partnership units into common shares of the REIT on a one-for-one basis; however, the REIT may elect to pay cash instead of shares upon conversion. The REIT may register the issuance of common shares underlying outstanding limited partnership units pursuant to Rule 415(a)(1)(iv). If the REIT satisfies the registrant eligibility requirements in Instruction I.A of Form S-3, it may register the offering on Form S-3 pursuant to Instruction I.B.4 of the form. [Jan. 26, 2009]

612.17 Plans of financing can involve periodic adjustments of interest or dividend rates, rollovers of securities, and plans to buy back and re-market securities, sometimes coupled with “puts” or guarantees (which themselves are securities). Filings involving such plans require an analysis of Section 5 and Rule 415 issues with respect to all securities involved in the offerings. Even after the original offering of the securities has terminated, the registrant may still be engaged in a continuous or delayed offering with respect to the future periodic issuance or modification of securities. These subsequent transactions may involve primary offerings of the issuer’s securities to the extent the issuer pays a remarketing or auction agent or otherwise is involved in subsequent sales such as in the remarketings or auctions. [Nov. 26, 2008]