Securities Offering
Reform
(Part I)
Presentation to Colorado Bar Association
Securities Subsection Luncheon
September 15, 2005
Overview
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New Categories of Issuers
Liberalized Shelf Registration
Prospectus Delivery Reforms
Clarification of Liability Issues
Additional Disclosures Required in Periodic
Reports
NEW CATEGORIES
OF ISSUERS
WKSIs
A WKSI is an issuer that:
 is required to file reports pursuant to Section
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13(a) or Section 15(d) of the Exchange Act;
is eligible to use either Form S-3 or Form
F-3;
satisfies either the public float test or the
issuance test; and
is not an ineligible issuer.
Expanded Form S-3 Eligibility

Expanded for majority-owned subsidiaries –
now allows for:
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S-3 registration of guarantees of non-convertible
securities issued by the parent
S-3 registration of guarantees of non-convertible
securities issued by a “sister” subsidiary
Public Float Criteria

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Worldwide market value of at least $700 million
Determined in a manner consistent with the
existing public float requirements for Form S-3
eligibility
Issuance Criteria
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At least $1 billion in aggregate principal
amount of non-convertible securities issued in
registered transactions in the last three years
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Primary offerings for cash registered under the
Securities Act
exchange offers and Rule 144A offerings not
included in the calculation
May include guarantees
(cont.)
Issuance Criteria
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A WKSI that satisfies only the issuance test will
be considered a WKSI only in connection with
the registration of non-convertible securities
and full and unconditional guarantees of
certain securities; but
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If the issuer has a public float of at least $75 million
and is therefore able to register a primary offering
of its securities on Form S-3 or Form F-3, the
limitation does not apply
Eligibility Determination Date
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As of the later of
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(i) the time of filing of the issuer’s most recent
shelf registration statement or
(ii) the time of its most recent amendment to
the shelf for purposes of complying with
Section 10(a)(3) of the Securities Act
60 day window period
Other New Categories of Issuers
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Seasoned Issuers – Issuers eligible to use Form S-3 for primary
offerings.
Unseasoned Issuers – Issuers not eligible to use Form S-3 or Form F3 for primary offerings.
Non-Reporting Issuers – Issuers not required to file Exchange
Act reports.
Ineligible Issuers – Includes, among others:
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blank check companies, shell companies and penny stock issuers;
reporting issuers not current in their Exchange Act reports;
issuers who have filed for bankruptcy or insolvency in the past three
years; and
issuers who have violated anti-fraud rules during the past three years.
LIBERALIZED SHELF
REGISTRATION
Automatic Shelf Registration
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WKSIs only
Registration statement on Form S-3 or Form
F-3
Unspecified amounts, of different types of
securities, for primary or secondary sale
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But “issuance test” WKSIs only permitted to
register non-convertible equity unless $75 million
public float
Automatic Shelf Registration (cont.)
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Exclusion of information from base prospectus
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whether the offering is a primary or secondary
offering (and the identity of any selling
securityholders)
description of the securities to be offered (other
than identification by name or class )
plan of distribution
identification of other issuers
Automatic Shelf Registration (cont.)
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“Pay-as-you-go” Fees
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No payment at time of filing
Pay the fee within the time required to file 424
prospectus
Can be paid in advance (as currently)
Update “Calculation of Registration Fee” table in
prospectus supplement or post-effective
amendment
Not mandatory (check the box)
Codification of Base Prospectus
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New Rule 430B
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All registrants may omit information from a base prospectus that is
“unknown or not reasonably available” at the time of filing a registration
statement.
WKSIs can omit additional information
Information omitted from the base prospectus, can be included
in:
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a prospectus supplement,
a post-effective amendment (which is subject to SEC review for issuers
other than WKSIs), or
where permitted, through an Exchange Act filing incorporated by
reference into the registration statement
Selling Securityholders and
Resale Registration Statements
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WKSIs may omit the identity of selling securityholders, without
condition
Seasoned issuers may omit the identity of selling securityholders
if the following conditions are met:
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the initial transaction completed,
the registration statement identifies the original offering, and
the securities are outstanding prior to the time of the initial filing of the
resale registration statement.
Qualified issuers may use a prospectus supplement to identify
selling security holders and the amounts of securities to be sold
Duration
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Prior rule - shelf registration statement limited to
securities reasonably expected to be sold within two
years of the effective date
New rule - shelf registration statement can be used for
up to three years after effectiveness
Any unsold securities covered by the prior registration
statement and/or any paid but unused fees in
connection with a prior registration statement can be
carried over to the new registration statement
Additional Changes
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Elimination of “convenience shelf ” doctrine
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Immediate takedowns permissible
Elimination of restrictions on “at-the-market”
offerings
Additional Changes (cont.)
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Conforming changes to Item 512 of Regulation
S-K :
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Permits updating by (i) use of a prospectus
supplement or (ii) Exchange Act report
incorporated by reference
Acknowledges that information in a filed
prospectus supplement is part of the registration
statement, and that a new effective date will be
established for purposes of liability in a shelf
takedown upon the filing of the prospectus
supplement
Incorporation
by Reference into Form S-1
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Now available to reporting issuers current in
reporting obligations
Incorporation by reference into a Form S-1 is
not available to:
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reporting issuers that are not current in their
Exchange Act reports
certain blank check companies, shell companies
and penny stock companies
issuer effecting an offering in connection with a
business combination transaction
(cont.)
Incorporation
by Reference into Form S-1
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No forward incorporation by reference
Form S-2 has been eliminated since it would be
more restrictive than the new Form S-1
PROSPECTUS DELIVERY
REFORMS
Existing Requirement
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Section 5 of the Securities Act requires that a
statutory prospectus be delivered before, or at
the same time as, delivery of a security
No general rule providing safe harbor
Prospectus Delivery Reforms
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Amendments
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“Access equals delivery” pursuant to new Rule 172.
Confirmations and notices of allocation.
 Notice of registration.
 Transactions on an exchange.
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Aftermarket prospectus delivery.
LIABILITY ISSUES
Securities Act Liability
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Sellers have potential liability for:
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Materially deficient disclosure in a registration
statement (Section 11)
Materially false or misleading statements in
prospectuses or oral communications (Section
12(a)(2))
Sale of securities by fraudulent means (Section
17(a))
Time of Sale
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When is time of sale?
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date of contractual commitment
Terminating old contract and entering new
contract
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Putting information in final does not avoid Section
12(a)(2) liability if that information is included after
contractual commitment
Section 12(a)(2) liability can be negated if issuer
goes back to buyers with new information and gives
buyers a chance to back out of contract
Prospectus Supplement
Information Deemed Part of the
Registration Statement
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Prospectus supplements not in connection with
takedown –
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date of first use.
Prospectus supplements in connection with
takedown –
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as of earlier of (i) the date it is first used, or (ii) the date
and time of the first contract for sale of securities in the
offering to which the prospectus supplement relates
New Effective Date
for Section 11 Liability
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New effective date is deemed to occur on the date on which
a prospectus supplement filed pursuant to Rule 424(b)(2),
(b)(5) or (b)(7) is deemed part of the registration statement
New effective date will not be created for directors or
signing officers unless
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prospectus filed for purposes of updating the registration
statement pursuant to Section 10(a)(3), or
Prospectus reflects a fundamental change in the information
contained in the registration statement
(cont.)
New Effective Date
for Section 11 Liability (cont.)
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Generally not a new effective date for auditors
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But if new financials requiring new consent, new
effective date
Generally not a new effective date for experts
other than auditors
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But if new report or opinion requiring new consent,
new effective date
Issuer as Seller
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“Unwarranted uncertainty” as to liability of issuers
under Section 12(a)(2) in underwritten offerings
Section 12(a)(2) imposes liability on “sellers”
Court decisions found no Section 12(a)(2) liability for
issuer, where the “seller” was an underwriter
Rule 159A(a) attaches “seller” status for Section
12(a)(2) liability to issuer, on the basis of the
communications made to purchasers (i.e., the
prospectus)
ADDITIONAL DISCLOSURES
REQUIRED
IN PERIODIC REPORTS
Disclosure of Risk Factors
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Form 10-K now requires issuers disclosure of
“plain English” risk factors
Form 10-Q will need to include any updates or
material changes to the risk factors reported in
the last Form 10-K
Risk factors are as required by S-K Item 503
Companies should adopt disclosure controls
and procedures to identify new and evolving
material risks to the business
Disclosure of
Unresolved SEC Comments
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Accelerated filers and WKSIs must disclose the
substance of any unresolved written comments from
the SEC on the issuer’s Exchange Act reports in their
annual reports on Form 10-K:
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if the issuer believes the comment is material, and
if the comment was issued more than 180 days before the
end of the fiscal year covered by the annual report and
remains unresolved on the date of filing the annual report
The issuer may also explain its position with respect to
the unresolved comments
Disclosure of
Voluntary Filer Status
10-K only:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act.
Yes 
No 
10-K, 10-KSB:
Indicate by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.
Yes 
No 
Note—Checking the box above will not relieve any registrant required to file reports
pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under
those Sections.
Thank You
mmcgawn@faegre.com
(303) 607-3664