Expanding WKSI Eligibility Act
The Expanding WKSI Eligibility Act would make it easier for issuers to qualify as a well-known seasoned issuer (WKSI) under the federal securities laws. It lowers the non-affiliate voting and non-voting equity market-value threshold to $400 million and removes the requirement for a minimum worldwide market value of outstanding equity held by non-affiliates. In addition, it preserves the remaining WKSI criteria that issuers must meet under Form S-3 (as currently defined) but without the worldwide market-value threshold. The bill also requires the Securities and Exchange Commission (SEC) to annually publish data on the number of withdrawn WKSI determinations sought under the relevant rule. Overall, the measure broadens eligibility for WKSI status, likely enabling a larger set of issuers to use shelf registrations and related streamlined offering provisions.
Key Points
- 1Lowers the non-affiliate aggregate market value threshold for WKSI qualification to $400 million (using the measurement method in Form S-3 instruction I.B.1 as in effect on enactment).
- 2Removes the requirement in WKSI criteria for a minimum worldwide market value of outstanding voting and non-voting equity held by non-affiliates.
- 3Keeps the remaining WKSI criteria from 17 C.F.R. 230.405 in place, but without the removed worldwide-value reference.
- 4Adds an SEC reporting obligation: within 90 days after year-end, the SEC must publish the total number of applications where an issuer sought a WKSI determination under 230.405, requested to be deemed not an ineligible issuer, and withdrew the application.
- 5Expands the pool of issuers that may qualify for WKSI status, facilitating faster and potentially cheaper primary offerings through Form S-3 shelf registrations.