Series 79 practice questionmediumFollow-On Offerings
A company files a shelf registration for common stock. When executing a takedown, which advantage does this structure provide?
- AEliminates all SEC review of offering documents
- BGuarantees a higher offering price
- CAllows for rapid capital raises when market conditions are favorable✓ Correct answer
- DExempts the issuer from Blue Sky laws entirely
Explanation
Why C — Allows for rapid capital raises when market conditions are favorable
Shelf registration allows issuers to respond quickly to market windows without a full registration cycle. It does not eliminate SEC review or guarantee pricing, and Blue Sky exemption is governed by other rules. The trap is confusing 'rapid' with 'automatic' approval or thinking legal requirements are waived.
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