General Securities Representative (Series 7) Practice Exam

What is the maximum duration for which a shelf offering can be active?

1. 1 year

2. 2 years

3. 3 years

4. 5 years

The correct answer is: 3 years

A shelf offering allows a company to register a new issue of securities and then sell those securities to the public in a delayed manner over a period of time. The maximum duration for which a shelf offering can be active is three years. This duration is established by the Securities and Exchange Commission (SEC) regulations, primarily found under Rule 415 of the Securities Act of 1933. This three-year period gives companies the flexibility to market their securities when conditions are favorable, without needing to go through the registration process repeatedly. It helps companies efficiently manage their capital needs and respond to market opportunities. After the three years, an issuer must file a new registration statement to continue offering the remaining securities that were not sold during the initial shelf offering, ensuring that the information available to investors is current and relevant.