On March 19, 2026, the Securities and Exchange Commission’s (“SEC”) Division of Corporation Finance issued a staff interpretation to provide relief to certain companies using effective Form S-3 registration statements to raise capital in the public markets through at-the-market (“ATM”) securities offerings.
If, at the time a such a company files its Form 10-K annual report (or otherwise updates its prospectus under Section 10(a)(3) of the Securities Act of 1933), it determines that it does not meet the $75 million“public float” requirement under Form S-31, such a company would fall into Form S-3’s “baby shelf” category2, which limits the aggregate market value of the securities a company can sell during any 12-month period to no more than 1/3 of the company’s “public float.”
Under this new staff interpretation (Question 116.26 of the Securities Act Forms Interpretations), the staff indicated that it would not object when a company engaging in an ATM offering that would otherwise lose its eligibility to offer and sell its securities beyond the “baby shelf” limit3 continues to offer and sell the full amount of securities covered by its existing ATM prospectus supplement (beyond such “baby shelf” limit) when:
- the company had an effective Form S-3 for its ATM offering at the time of the Form 10-K filing/update,
- the company had previously met the $75 million public float requirement before the Form 10-K filing /update caused its loss of eligibility,
- the company entered into an ATM sales agreement with a named selling agent before the Form 10-K filing/update,
- the agreement covered an amount of securities that the company reasonably expected to offer and sell, and
- the company filed a prospectus supplement for the ATM offering prior to the filing of its Form 10-K/update.
This interpretation reflects the informal views of the staff of the SEC’s Division of Corporation Finance and is not a binding rule, regulation, or statement of the SEC. However, this relief may nonetheless provide access to capital for certain issuers that would otherwise lose such capacity under their existing ATM programs under applicable SEC regulations.
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1 “Public float” in this context refers to the aggregate market value of the voting and non-voting common equity held by non-affiliates of the company. See General Instructions I.B.1 and I.B.6 of SEC Form S-3. The $75 million threshold is required for issuers seeking to qualify for primary offerings under General Instruction I.B.1.
2 See General Instruction I.B.6 of SEC Form S-3.
3 For example, when its Form 10-K is filed (or any other Section 10(a)(3) prospectus update). The staff interpretation assumes the company is otherwise eligible to conduct offerings under the “baby shelf” eligibility requirements.
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