6.5.3: Note on Rule 415 'Shelf' Registrations

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Abstract

There are occasions when the registrant will want to negotiate the right to an evergreen registration statement. Some experienced practitioners are advocates of a provision in the registration rights agreement which acts in effect as a cleanup, requiring the issuer (after a certain period) to file a registration statement under SEC Rule 415 to register sales, sometimes called uncoordinated sales, seriatim by the holders of restricted securities-a so-called "shelf registration"-and to keep the registration statement effective for as long as, say, nine months. This practice will give holders of restricted securities who have not, for one reason or another, participated in prior demand or piggyback registrations the ability to sell their stock (albeit without the benefit of a formal underwriting) in transactions which don't necessitate compliance with the so-called "dribble out" rules under Rule 144. A cleanup shelf registration can be particularly interesting when, for example, an issuer