Exploring Piggy Back Registration: A Comprehensive Legal Overview

Q: Who needs to approve piggy back registration?

The underwriter must approve the inclusion of existing shares in the offering.

Q: Can all shareholders participate in piggy back registration?

Participation depends on the terms set by the underwriter and the company.

Definition & meaning

Piggy back registration refers to a process where an underwriter permits existing shareholders of a company to sell their shares alongside a new public offering of shares. This arrangement requires the underwriter's consent and is documented in the prospectus for the new issue. The prospectus outlines the details of both the public and private share offerings, including the identities of the sellers of the private shares.

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Legal use & context

Piggy back registration is commonly used in the context of securities law, particularly in initial public offerings (IPOs) and secondary offerings. It allows existing shareholders to liquidate their investments while a company raises capital through new shares. This term is relevant in corporate finance and securities regulation, and individuals may utilize legal forms to facilitate the registration process.

Key legal elements

Real-world examples

Here are a couple of examples of abatement:

Example 1: A technology company plans to go public and issues a prospectus for its IPO. The underwriter allows existing investors to sell a portion of their shares in the same offering, providing liquidity to those investors.

Example 2: A pharmaceutical firm is conducting a secondary offering. The underwriter permits early investors to sell their shares alongside the new shares being offered to the public (hypothetical example).

Comparison with related terms

Term	Definition	Difference
Piggy Back Registration	Allows existing shareholders to sell shares in a new offering.	Involves both new and existing shares in a single offering.
Secondary Offering	Sale of shares that were previously issued by the company.	May not involve new shares; focuses on existing shares only.
Initial Public Offering (IPO)	The first sale of stock by a company to the public.	Typically does not include existing shareholders selling shares.

Common misunderstandings

What to do if this term applies to you

If you are an existing shareholder interested in selling your shares during a new offering, consult with your financial advisor or legal professional. You can also explore US Legal Forms for templates that can help you navigate the registration process. If the situation is complex, seeking professional legal assistance is advisable.

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Quick facts

Typical fees: Varies by underwriter and offering size.
Jurisdiction: Governed by federal securities laws.
Possible penalties: Non-compliance can lead to fines and legal repercussions.

Key takeaways

FAQs

What is the purpose of piggy back registration?

It allows existing shareholders to sell their shares while a company raises capital through new shares.