News

SEC provides ATM program relief for public companies following loss of primary S-3 eligibility

24 March 2026

On March 19, 2026, the SEC issued guidance clarifying that a public company conducting an at‑the‑market (ATM) offering pursuant to a previously filed ATM prospectus supplement may sell the full amount of securities covered by it even if the company no longer meets the $75 million public float requirement needed to rely on General Instruction I.B.1 to Form S‑3 (the Public Float Requirement).

Prior to this guidance, when a public company failed to meet the Public Float Requirement, it became restricted to selling no more than one-third of their public float value over any trailing 12-month period under Instruction I.B.6 to Form S-3 (the Baby Shelf Rule). This new SEC guidance offers additional flexibility for smaller reporting companies and other public companies with volatile stock prices.

Key Takeaways:

No disruptions to existing ATM prospectus. A company can raise the full amount originally planned under an existing ATM prospectus without worrying about future restrictions imposed by the Baby Shelf Rule due to the company’s reduced market cap.
Strategic considerations on size of ATM prospectus. If a company is on the verge of becoming subject to the Baby Shelf Rule, it should consider the size of its current ATM prospectus and whether an additional prospectus should be filed to take advantage of the new SEC guidance.
Future ATM prospectuses. This SEC guidance only applies in cases where a company has an existing ATM prospectus, and the company subsequently fails to meet the Public Float Requirement. If a company fails to meet the Public Float Requirement or is otherwise not eligible to use a Form S-3, it would still be subject to the Baby Shelf Rule for any future ATM prospectuses.

Authored by Steve Abrams, Stephen Nicolai, Amanda Brown, and Kayvon Stohler-Paul