SEC Guidance on ATM Offerings When Public Float Drops Below $75M

JD Supra Finance & Banking

Published April 3rd, 2026

Detected April 3rd, 2026

Summary

The SEC Division of Corporation Finance issued Corporation Finance Interpretation 116.26 on March 19, 2026, confirming that companies conducting at-the-market offerings (ATMs) under Form S-3 may continue selling securities under an existing prospectus supplement even if their public float falls below the $75 million threshold after the offering begins. The guidance specifically addresses the 'baby shelf' rule under General Instruction I.B.6 to Form S-3.

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What changed

The SEC Division of Corporation Finance issued Corporation Finance Interpretation 116.26, providing guidance for issuers conducting ATM offerings under Form S-3 when their public float drops below the $75 million requirement under General Instruction I.B.1. The staff confirmed it will not object if a company continues offering and selling the full amount of securities under an ATM prospectus supplement filed before a Section 10(a)(3) update, even if that amount would exceed the 'baby shelf' rule cap, provided the company entered into an agreement with a named selling agent for an amount reasonably expected to be sold.\n\nCompanies with active or planned ATM programs should note this interpretation provides flexibility when market fluctuations affect public float calculations. The guidance is effective immediately upon issuance and represents staff interpretation rather than formal rulemaking. While no specific compliance actions are required, public companies should be aware that existing ATM programs can continue without restructuring if float thresholds are not met at subsequent update dates.

Source document (simplified)

April 3, 2026

New SEC Staff Guidance Brings Welcome Certainty to ATM Offerings

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On March 19, 2026, the SEC’s Division of Corporation Finance issued new Corporation Finance Interpretation 116.26, providing guidance for issuers conducting at-the-market offerings (ATMs) under Form S-3. The interpretation addresses the scenario where a company launches an ATM while eligible to conduct a primary offering on Form S-3, but at the time of its next Securities Act Section 10(a)(3) update its public float has fallen below the $75 million requirement under General Instruction I.B.1 to Form S-3. The company remains eligible to rely on the “baby shelf” rule under General Instruction I.B.6 to Form S-3.

The staff confirmed that, in these circumstances and where the company entered into an agreement with a named selling agent for an amount the company reasonably expects to sell, it will not object if the company continues to offer and sell the full amount of securities under the ATM covered by the prospectus supplement filed before the Section 10(a)(3) update, even if that amount would exceed the cap imposed by the “baby shelf” rule. In effect, companies need not cease or curtail offerings under an existing ATM as a result of a change in circumstances due to later fluctuations in stock price.

For public companies, this guidance reduces uncertainty around ATM execution and capital planning. Without it, an issuer may have needed to suspend or restructure an ongoing program midstream, making this interpretation a welcome source of certainty and flexibility in a fluctuating market environment.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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