To gain easier access to U.S. public markets, a company must meet specific requirements set by the Securities and Exchange Commission (SEC) to become a well-known seasoned issuer (WKSI). These requirements include timely filing periodic reports for 12 months, no default on debts or long-term leases, a public float of over $700 million, and issuing more than $1 billion in non-convertible debt securities in primary offerings. Companies that qualify as a WKSI can make oral offers and free writing prospectuses during the pre-filing period and automatically register their shelf offerings without SEC review by filing their Form S-3.
To be classified as a Well-Known Seasoned Issuer (WKSI), an issuer must fulfil three criteria. Firstly, they must meet the requirements of Form S-3, which entails timely filing periodic reports for 12 months and having no defaults on debt or long-term leases. Secondly, the issuer must have a public float exceeding $700 million and have issued over $1 billion in non-convertible debt securities through primary offerings. Lastly, the issuer must not be considered an “ineligible issuer,” meaning they have met their periodic reporting obligations, are not a shell company, have not recently filed for bankruptcy, and have not been convicted of a felony or misdemeanor. Becoming a WKSI offers several advantages, including fewer restrictions on making oral offers and providing free writing prospectuses during the pre-filing period. WKSIs also qualify for “automatic shelf registration,” allowing their shelf offerings to be immediately effective upon filing Form S-3, without requiring SEC review. Additionally, WKSIs are not required to disclose as much detail in their base prospectuses for shelf offerings, such as the amount of securities to be sold or the names of selling shareholders. For instance, if a company has a public float of $800 million and has issued $1.5 billion in non-convertible debt securities through primary offerings, they would meet the second requirement to become a WKSI. This classification would grant them greater flexibility and fewer regulations when accessing U.S. public markets.
A Well-Known Seasoned Issuer (WKSI) is a term used in securities law to describe a company that meets certain criteria and is eligible to use certain streamlined registration and offering processes. These criteria include having a public float of at least $700 million, being listed on a national securities exchange, and having filed all required reports with the Securities and Exchange Commission (SEC) for at least one year.
Being classified as a WKSI provides several benefits, including the ability to use a shelf registration statement, which allows the company to offer and sell securities on an ongoing basis without having to file a new registration statement each time. WKSI status also allows for more flexibility in the timing and pricing of offerings, as well as the ability to communicate with potential investors more freely.
To qualify as a WKSI, a company must meet the eligibility criteria set forth by the SEC, including having a public float of at least $700 million, being listed on a national securities exchange, and having filed all required reports with the SEC for at least one year. The company must also not be an investment company or a blank check company.
Yes, a company can lose its WKSI status if it no longer meets the eligibility criteria. For example, if a company’s public float falls below $700 million or it fails to file required reports with the SEC, it may lose its WKSI status. In such cases, the company would need to follow the regular registration and offering processes instead of the streamlined processes available to WKSI companies.
There are no specific restrictions on the types of securities that a WKSI can offer. However, the offering and sale of securities by a WKSI must still comply with all applicable securities laws and regulations, including those related to disclosure, anti-fraud provisions, and investor protection.
Yes, a foreign company can qualify as a WKSI if it meets the eligibility criteria set forth by the SEC. The criteria are generally based on the company’s market capitalization, listing status, and filing history, rather than its country of origin.
Yes, a WKSI can offer securities to both institutional and retail investors. However, the specific terms and conditions of the offering, including any restrictions on who can participate, will depend on various factors, such as the type of securities being offered and the applicable securities laws and regulations.
No, being a WKSI does not exempt a company from all regulatory requirements. While WKSI status provides certain benefits and streamlined processes, companies must still comply with all applicable securities laws and regulations, including those related to disclosure, reporting, and investor protection.
Yes, a company can voluntarily give up its WKSI status if it no longer wishes to avail itself of the benefits and streamlined processes associated with WKSI status. However, once a company gives up its WKSI status, it would need to follow the regular registration and offering processes for future securities offerings.
Yes, a company can regain its WKSI status if it once again meets the eligibility criteria set forth by the SEC. This may involve increasing its public float, ensuring compliance with filing requirements, and meeting any other applicable criteria. Once the company meets the criteria, it can apply for WKSI status and, if approved, regain the associated benefits and streamlined processes.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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