Posted in Finance, Accounting and Economics Terms, Total Reads: 402
Definition: Shelf Offering
It is a provision by Securities and Exchange Commission (SEC) that gives an opportunity to an issuer to incrementally offer new securities to the market over a period of time instead of offering it at once. To do this a company first have to go through shelf registration process with Securities and Exchange Commission.
An issuer is allowed to register new security and extend the offering upto two years by Securities and Exchange Commission under rule 415. This gives a company flexibility to come up with a public offering any time they may please. But during this time if the company is valued the unreleased stocks will not be considered under shares outstanding.
Having a very short lead time, shelf offering provides a company a huge advantage to move fast during the right time to offer new shares. By leveraging this benefit a company can wait for the favourable market condition to make new offerings.