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Series 79 practice questionmediumPIPE Transactions

In a traditional PIPE transaction, the issuer typically agrees to file a resale registration statement within what timeframe?

  1. AWithin 5 business days of closing
  2. BNo resale registration is required for PIPE transactions
  3. CWithin one year of closing
  4. DWithin 30-45 days of closing, with effectiveness required within 90-120 days✓ Correct answer
Explanation

Why D — Within 30-45 days of closing, with effectiveness required within 90-120 days

In a typical PIPE transaction, the purchase agreement includes registration rights that require the issuer to file a resale registration statement (usually on Form S-3 if eligible) within 30-45 days of closing and to use its best efforts to have it declared effective within 90-120 days. If the issuer fails to meet these deadlines, it typically must pay liquidated damages (penalty payments) to the investors, often in the range of 1-2% per month. These registration rights are essential because PIPE securities are initially restricted and cannot be freely resold until registered.

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