Judge Elihu Smails, the Chairman of the Board of your client, The Gopher Corporation, calls you from the golf course on a beautiful day in April. “I’m here at the back nine at Bushwood Country Club. My grandson Spaulding tells me there is another club Gopher should join–something called a WKSI. What’s that all about?”

A well-known seasoned issuer, or WKSI (pronounced “WICK‑see”), is a very special category of issuers that the SEC created in 2005. A major benefit that WKSIs enjoy is “automatic shelf registration.” Unlike other issuers, whose shelf registration statements are subject to SEC review and comment before becoming effective, a WKSI’s automatic shelf registration statement becomes effective immediately upon filing.

To determine whether Gopher qualifies as a WKSI, you begin with Securities Act Rule 405, which defines “well-known seasoned issuer” and contains the requirements for WKSI status.
Under Rule 405, a WKSI includes a company that:

1. Meets the registrant requirements of General Instruction I.A of Form S-3 or Form F-3, meaning essentially that the issuer:

• Has been an SEC-reporting company for at least 12 calendar months and has timely filed all material required to be filed with the SEC during the preceding 12 calendar months; and

• Since the end of the last fiscal year has not had any material defaults on indebtedness or long‑term leases.

2. As of a date within 60 days of the “determination date” (discussed below) has:

• a worldwide float of at least $700 million (i.e., market value of outstanding voting and nonvoting common equity held by non-affiliates); or
• issued for cash during the past three years at least $1 billion in aggregate principal amount of non-convertible debt securities in primary offerings registered under the Securities Act.

3. Is not an “ineligible issuer” (discussed below) or an asset-backed issuer.
Determination date

The “determination date” is the later of:

• the date that Gopher filed its most recent shelf registration statement;
• the date that Gopher most recently amended its shelf registration statement for purposes of complying with Securities Act Section 10(a)(3) (a step typically done by filing its Annual Report on Form 10-K or 20-F, since that filing operates as a Section 10(a)(3) update to an effective shelf registration statement); and
• the filing date of Gopher’s most recent Form 10-K or Form 20-F if Gopher has not filed (or amended) a shelf registration statement within the last 16 months.

What if Gopher has never filed a registration statement but now wants to file a new WKSI shelf? In that case, the determination date would be the time of filing of its new shelf registration statement. See C&DI 203.09. Similarly, the determination date is the date of filing the new WKSI shelf registration statement if Gopher has a non-automatic shelf registration statement on file but now thinks it can qualify for WKSI status. See C&DI 203.10.
Ineligible issuer

There are many ways to make yourself ineligible. For membership at Bushwood, obnoxious behavior on the first tee will do the trick. For WKSIs, you get excluded from the club if you:

• are not current in Exchange Act reporting obligations (other than certain Form 8-Ks);
• are a blank check company, shell company or penny stock issuer;
• are a limited partnership offering other than through a firm commitment underwriting; or
• within the past three years: (1) Have filed for bankruptcy; (2) Have been convicted of a felony or misdemeanor under certain provisions of the Exchange Act; (3) Were made the subject of any judicial or administrative decree or order arising out of a government action that (a) prohibits certain conduct or activities regarding (including future violations of) the federal securities laws, (b) requires you to cease and desist from violating the antifraud provisions of the federal securities laws or (c) determines that you have violated those antifraud provisions; or (4) Have had any registration statement subject to a refusal order or stop order.

Note that in each case, the three-year period ceases on the date immediately following the third anniversary date of the condition that created the ineligibility (i.e., the SEC Staff has advised us informally that they interpret “three years” literally for this purpose, in contrast to the counting methodology used for 12 calendar months in the case of Form S-3 or Form F-3 eligibility discussed here).

Two additional practice tips on ineligible issuers:

• Master limited partnerships (MLPs) are a popular form of offering in energy deals. If an MLP is doing a firm commitment underwriting, it is an eligible issuer (i.e., is only an ineligible issuer to the extent it sells securities other than through a firm commitment underwriting). See C&DI 203.06.
• A WKSI’s newly formed finance subsidiary (even one with only nominal assets and operations) is not a shell company if, before a given offering, the subsidiary meets the conditions described in C&DI 203.04.

We do a deeper dive into maintaining (and losing) WKSI status here.