Secondary Offering

In the context of registered securities offerings, an SEC ( -registered offering in which selling stockholders ( or other securityholders of the company sell securities, as opposed to the company selling its own securities. The company does not receive any proceeds from the sale of securities by the selling securityholders in a secondary offering, and therefore the purpose of the offering is to provide liquidity to the selling securityholders, not to raise capital for the company.

An offering can be purely secondary, meaning only selling securityholders sell in the offering, or it can be mixed primary ( /secondary, meaning that both the company and selling securityholders sell securities in the offering.

Companies that file registration statements for secondary offerings often do so because they are required to under a registration rights agreement ( they previously entered into with the selling securityholders.

Unregistered offerings exempt from registration under Rule 144A ( and Regulation S ( in which securityholders sell securities are also referred to as secondary offerings.

For a detailed discussion of registered secondary offerings, see Practice Note, Follow-on and Secondary Registered Offerings ( . For more information on registration rights agreements, see Practice Notes, What Are Registration Rights Agreements ( and Registration Rights Agreement for Rule 144A and Regulation S Offerings: Understanding the Terms ( .

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