Introduction:

Utilizing a shelf registration statement on Form F-3 (for foreign private issuers) or S-3 (for domestic issuers) provides significant advantages to publicly traded companies, including the ability to conduct offerings at variable prices, such as at-the-market or other than fixed-price offerings. This flexibility is a key reason why eligible companies prefer these forms when raising capital in the public markets. For foreign private issuers (FPIs), F-3 offers an added layer of benefits that align with the unique regulatory framework applicable to them.

In this blog, we will explore the registrant and transaction requirements for using Form F-3, highlighting its advantages and how it compares with Form S-3. We will also look at the specific types of offerings that can be registered using Form F-3, such as primary and secondary offerings, the baby shelf rule, and equity line transactions.

Registrant Requirements for Form F-3:

Companies seeking to use Form F-3 must meet the following eligibility requirements:

1. Class of Securities Registered: The company must have a class of securities registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934 or be required to file reports under Section 15(d).
2. Annual Report Filing: The company must have filed at least one annual report on Form 20-F, 10-K, or 40-F.
3. Reporting History: The company must have filed all required Exchange Act reports for the previous 12 months, including timely filing during the most recent reporting period.
4. Compliance with XBRL Requirements: The company must comply with Inline XBRL requirements, which applies to all reporting companies.

Transaction Requirements:

Form F-3 can be used for several types of transactions, including:

1. Primary Offerings: For primary offerings, the company’s non-affiliated market value must be $75 million or more. This is calculated by taking the average price of the stock over 60 days prior to the filing of the registration statement.
2. Baby Shelf Offerings: For companies with a non-affiliate market value of less than $75 million, Form F-3 can still be used under the “baby shelf” rule, allowing up to one-third of that market value to be offered over a trailing 12-month period.
3. Secondary Offerings: Form F-3 can also be used for secondary offerings where existing shareholders resell securities. This is often employed in connection with convertible securities or warrants.
4. Rights Offerings and Dividend Reinvestment Plans: The form is also available for securities offered under rights offerings or dividend and interest reinvestment plans.

Key Advantages:

• Flexibility in Pricing: Unlike traditional fixed-price offerings, Form F-3 allows issuers to engage in variably priced offerings, giving them flexibility in timing and market pricing for their securities.
• Reduced Disclosure Burden: The form allows issuers to incorporate by reference their Exchange Act filings, meaning companies don’t need to provide all the detailed information repeatedly.
• Convenience: Once registered, companies can take down securities in multiple transactions over time, allowing them to quickly raise capital as market conditions change.

Conclusion:

For foreign private issuers, the ability to use Form F-3 offers substantial benefits, particularly for companies that want to raise capital in a flexible, efficient manner. By meeting the form’s eligibility and transaction requirements, companies can take advantage of variably priced offerings and incorporate their periodic reports by reference, reducing administrative burdens.

If your company is considering a Form F-3 offering, understanding these nuances will help navigate the regulatory framework and take full advantage of the benefits this form offers.