Well-known seasoned issuer (WKSI) is a category of issuer which allows greater flexibility in accessing U.S. public markets.
Qualification as a well-known seasoned issuer
For an issuer to qualify as a WKSI, they must satisfy the three requirements of SEC Rule 405:
- The issuer must meet the requirements of Form S-3. This essentially requires that the issuer has (a) timely filed periodic reports for 12 calendar months and (b) not defaulted on any indebtedness or long-term leases.
- The issuer has (a) over $700 million in public float and (b) issued more than $1 billion in principal of non-convertible debt securities in primary offerings.
- The issuer is not an “ineligible issuer.” An issuer can be ineligible by, among other things, failing to meet their periodic reporting requirements, being a shell company, having filed for bankruptcy recently, or having been convicted of a felony or misdemeanor.
Benefits to qualifying as a well-known seasoned issuer
WKSIs are subject to fewer gun-jumping regulations. Rule 163 of the Securities Act allows WKSIs to make oral offers and free writing prospectuses during the pre-filing period.
Another major benefit of qualifying as a well-known seasoned issuer is they qualify for “automatic shelf registration,” meaning that their shelf offerings are immediately effective upon filing their Form S-3, since their shelf registration statements are not subject to SEC review. For shelf offerings, WKSIs do not need to disclose as much detail in their base prospectuses. For example, they do not need to specify the amount of securities they plan to sell or name selling shareholders.
[Last updated in February of 2022 by the Wex Definitions Team]