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Prospectus supplement (424B5)
Also called: 424B5, 424B3, 424B4, 424B7, Rule 424(b), shelf takedown
The document a company files under Rule 424(b) to describe a specific offering; Form 424B5 is the usual filing for a stock sale off a shelf.
Explanation
A shelf registration contains only a base prospectus describing the kinds of securities a company might sell. When it actually sells, it files a prospectus supplement with the terms of that deal: the security, the amount, the price or pricing method, the banks or sales agent, and the use of proceeds.
Rule 424(b) sets the filing types. 424B5 is the common one for shelf takedowns of stock, including ATM programs, registered directs and underwritten follow-ons. 424B2 is used mostly for debt and structured notes, 424B4 for the final prospectus of an IPO, 424B3 for resale prospectuses and updates, and 424B7 to name selling shareholders. A 424B5 is due by the second business day after the deal is priced or the prospectus is first used, whichever comes first.
Read the cover and the offering summary first: they show how many shares and warrants are sold, at what price, and the share count before and after the deal.
Why it matters
A 424B5 is usually the first formal confirmation that a company has sold stock, or set up a program to sell it. It turns a shelf (the possibility) into dilution (the fact).
How Equity Dictionary measures it
Every 424B filing of the last 36 months becomes an event on the offerings timeline, and the most informative recent documents are parsed for deal type, gross proceeds, price, share count and counterparties (labelled “parsed”). A supplement is classified by the security it offers, so a convertible preferred supplement that mentions a concurrent ATM is a convertible deal, not an ATM. The Dilution wire shows new 424B5s minutes after EDGAR accepts them.
Related terms
- Shelf registration: A registration statement, usually on Form S-3 or F-3, that pre-registers securities so a company can sell them later without a new SEC review each time.
- At-the-market offering (ATM): A program that lets a company sell new shares a little at a time directly into the market at prevailing prices, through a broker acting as its sales agent.
- Registered direct offering (RDO): A sale of registered shares negotiated directly with a few institutional investors through a placement agent, usually at a discount and closed within a day or two.
- Follow-on offering: A sale of new shares by a company that is already public, usually through underwriters or a placement agent and priced at a discount to the market.
- Form S-1: The full-length SEC registration statement used for IPOs and by companies that cannot use a shelf, including to register shares for resale.
Plain-English summary for research; not legal or investment advice.