Equity Distribution Agreements for At-the-Market Offerings

Summary

This practice note discusses equity distribution agreements for at-the-market (ATM) offerings. In an equity distribution agreement (also sometimes referred to as a "sales agency agreement" or "placement agency agreement"), a company engages a broker-dealer to conduct ATM offerings of the company's shares under an ATM program (also commonly referred to as an "equity distribution program" or "equity dribble out program"). In an ATM program, equity securities are sold from time to time at prevailing prices into an existing trading market under an effective shelf registration statement. An issuer must be eligible to use Form S-3 (or Form F-3, if a foreign private issuer for a primary shelf offering (i.e., an offering for the issuer's account) under Rule 415 (17 C.F.R. § 230.415) under the Securities Act of 1933, as amended (Securities Act), to conduct an ATM offering.