Reference
Issuer financing glossary
This glossary defines the terms an issuer actually meets in the documents: the instruments, the pricing mechanics, the United States resale rules that decide when shares can be sold, and the local vocabulary of capacity and disclosure in the other markets we cover. Where a term collides with an unrelated product, the collision is named.
Key takeaways
- Half of this vocabulary is contested. SEPA, SEDA, committed equity facility and share subscription facility describe substantially the same family of product under four different house names.
- Four terms belong to somebody else entirely. Equity line of credit is a consumer mortgage product, a subscription line is fund finance, an at-the-market order is a trading instruction, and DTC eligibility in Canada is a tax credit.
- The resale definitions carry the money. Restricted securities, tacking, shell company and Rule 144(i) decide whether shares can ever be sold, and they are the ones most often stated wrongly.
- Capacity vocabulary is local. General mandate, cleansing notice, third-party allotment and preferential allotment are the same idea expressed by four different rulebooks.
Names that collide, and what they actually mean
Nothing costs an issuer more time than treating two names for one product as two products, or two products with one name as the same thing. The table below covers the collisions that come up most often. The definitions after it are grouped by what they govern: the instrument, the price, the United States resale route, or the local capacity rule.
| Term you will see | What it means here | Where the confusion comes from |
|---|---|---|
| Standby equity purchase agreement | An issuer-drawn commitment to buy shares over a set period. | Largely one provider's house term, which is why the filing record for the phrase looks concentrated. |
| Standby equity distribution agreement | The same structure under an older name. | Provider and era, not mechanics. Nothing turns on which acronym is used. |
| Committed equity facility | The same family, named after the commitment rather than the standby. | Collides with committed credit facility, which is bank lending, and with fund finance. |
| Equity line of credit | Older United States usage for the same family. | Overwhelmingly a consumer home equity line of credit in ordinary usage. |
| Share subscription facility | The same family, worded as a subscription rather than a purchase. | Collides with the private-equity capital-call subscription line, a lending product. |
| At-the-market programme | Sales of new shares into the existing market through an agent. | Collides with the at-the-market order, which is an execution instruction. |
| Definitions as used on this site. Documents govern; read them rather than the label. | ||
Structures and instruments
PIPE transaction
A private investment in public equity. A listed issuer sells newly issued securities to selected investors in a privately negotiated deal with no marketed offering. The securities are unregistered at issuance, so resale needs a registration statement or an available exemption.
Registered direct offering
A sale of newly issued securities by a listed issuer to a small number of investors, priced off a registration statement that is already effective. Non-affiliate purchasers receive unrestricted shares at settlement, so no resale registration or holding period follows.
At-the-market offering (ATM)
A programme under which a listed issuer sells newly issued shares into the existing trading market over time, through a sales agent, at prevailing prices. Not to be confused with an at-the-market order, which is a trading instruction.
Convertible note
Debt of the issuer that the holder may convert into shares. For a listed issuer the conversion price is usually market referenced rather than fixed, which is what distinguishes it from the seed-stage convertible note used by private startups.
Convertible debenture
A convertible debt instrument, typically unsecured, and the standard label on TSX Venture Exchange and Canadian Securities Exchange financings. In India the same word covers compulsorily convertible and non-convertible debentures, which are a different market.
Standby equity purchase agreement (SEPA)
An agreement under which an investor commits to buy shares from the issuer, on the issuer's notice, up to an agreed aggregate amount over a set period. Largely the house term of one provider, and in substance the same product as a SEDA.
Standby equity distribution agreement (SEDA)
The older name for the same structure as a standby equity purchase agreement. The difference between the two labels is provider and era, not mechanics. Read the definitive documents rather than the acronym.
Committed equity facility
A facility under which an investor is committed to purchase shares at the issuer's election over a defined term. Unrelated to a committed credit facility, which is bank lending, and to fund-finance products that share the word committed.
Share subscription facility
A standing arrangement under which an issuer may issue shares to a committed subscriber over time. Not the private-equity capital-call subscription line, which lends to a fund against investor commitments and is an entirely different product.
Capital-call subscription line
A revolving loan to a private-equity or credit fund, secured on the uncalled capital commitments of its limited partners. It has no connection to issuer financing, and appears here only because it dominates searches for share subscription facilities.
Private placement
An issue of securities that is not made by public offering and relies on an exemption from prospectus or registration requirements. A private placement by a listed company is a different transaction from the private-placement debt market used by investment-grade borrowers.
Secondary offering
Loosely used for two different things: a further issue of new shares by the company, which is dilutive, and a sale of existing shares by a holder, which is not. Only the first raises money for the issuer.
Pricing, dilution and protection
VWAP
Volume weighted average price: the average traded price over a defined period, weighted by the volume done at each price. Most conversion and subscription formulas in this market reference a VWAP over a stated window rather than a single closing price.
Conversion discount
The agreed relationship between the market price over the pricing window and the price at which shares are issued on conversion or subscription. It is negotiated per transaction, and no provider can honestly publish one in advance.
Floor price
A stated minimum below which shares may not be issued under a convertible or a facility. It caps the number of shares issuable at low prices, and it is the single most important protection an issuer negotiates for.
Ratchet
A provision adjusting the conversion or subscription price downward if the issuer later issues securities more cheaply. It protects the investor against being repriced by a subsequent round, and increases dilution for existing holders.
True-up
A later adjustment to the number of shares already delivered, once the final price under the formula is known. It settles the difference between an estimated issuance and the contractual entitlement.
Ownership blocker
A contractual limit preventing an investor's holding from exceeding a stated percentage of the outstanding shares, commonly 4.99% or 9.99%. It caps conversion or exercise at any moment and keeps the investor below reporting and control thresholds.
Death spiral financing
A failure pattern rather than a product: a convertible with no floor price and no issuance cap, priced off a falling market, so each conversion adds shares, pushes the price lower and enlarges the next conversion.
Free float
The portion of a company's shares available to trade in the market, excluding stock held by insiders, control persons and locked-up holders. Free float, not market capitalisation, sets the realistic size of a placement.
United States resale and settlement
Rule 144
The safe harbour under the United States Securities Act rules by which restricted or control securities may be resold without registration, provided its conditions are satisfied. It is a safe harbour rather than an entitlement, and it is not available to every issuer.
Restricted securities
Securities acquired directly or indirectly from the issuer, or from an affiliate of the issuer, in a transaction not involving a public offering. They carry a legend and cannot be resold into the market until registered or exempt.
Holding period
The minimum period restricted securities must be held before Rule 144 becomes available: six months where the issuer has been subject to Exchange Act reporting for at least 90 days before the sale, and one year where it has not.
Tacking
Adding an earlier holder's holding period to your own so that the Rule 144 clock does not restart. Whether tacking is available depends on how the securities were acquired, and it is a question for counsel rather than for a spreadsheet.
Shell company
An issuer with no or nominal operations and either no or nominal assets, or assets consisting solely of cash and cash equivalents. The classification is a matter of fact, and it governs whether Rule 144 is available at all.
Rule 144(i)
The provision that switches Rule 144 off for securities initially issued by a shell company, or by an issuer that has at any time previously been one, except where its conditions are met. The most consequential rule in the small-cap resale market.
Current public information
The Rule 144(c) condition that adequate current information about the issuer is publicly available at the time of each sale. For a reporting company that means the required Exchange Act reports have actually been filed.
Affiliate
A person who controls, is controlled by, or is under common control with the issuer, typically officers, directors and large holders. Affiliates face additional Rule 144 conditions, including volume limitations and a filing requirement.
Form S-1
The general United States registration statement, used by issuers not eligible for a short-form shelf. In this market it is most often the vehicle for a resale registration covering shares already issued in a PIPE transaction.
Form S-3
The short-form United States registration statement available to eligible reporting issuers, and the basis of a shelf. It allows an offering to be priced and closed quickly by incorporating the issuer's existing reports by reference.
Baby shelf
The limitation in General Instruction I.B.6 of Form S-3: an issuer with a public float below US$75 million may still use the form for a primary offering, but may not sell more than one-third of its public float in any 12-month period.
Legend removal
The process of having the restrictive legend taken off a certificate or book-entry position so the shares can settle in the market. It normally requires an opinion of counsel and the co-operation of the transfer agent.
Transfer agent
The agent that maintains the issuer's shareholder register, issues and cancels shares, and applies or removes restrictive legends. Nothing settles without it, and its turnaround time is a real constraint on a closing.
DTC eligibility
Whether a security can be held and settled electronically through The Depository Trust Company. Without it, trades settle only by physical delivery, which in practice means there is no functioning market. Not the Canadian Disability Tax Credit.
DTC chill
A restriction on some of the depository's services for a security, most often on deposits, which leaves existing positions in place but blocks new ones. A global lock is the broader version, terminating all services for that issue.
Placement agent
The registered broker-dealer that markets and places a transaction with investors, usually on a best-efforts basis rather than by underwriting the book. The agent is the intermediary; the investor is the capital.
General information, not legal advice. These definitions describe securities-law, listing-rule and settlement concepts in general terms and are not a substitute for reading the rule or the definitive documents. Whether Rule 144 is available, whether a registration statement covers a particular holder, and how any exchange rule applies all depend on facts specific to the issuer. Take advice from qualified securities counsel in the relevant jurisdiction.
Terms used outside the United States
Listed Issuer Financing Exemption
A Canadian prospectus exemption in Part 5A of National Instrument 45-106 allowing a qualifying listed reporting issuer to raise capital off its continuous disclosure record and issue freely tradeable securities. Its limits were expanded by CSA Coordinated Blanket Order 45-935 in May 2025.
Reporting issuer
The Canadian term for a company subject to continuous disclosure obligations in a Canadian jurisdiction. Being a reporting issuer, and being current in those filings, is the gateway to most Canadian prospectus exemptions.
Cleansing notice
An Australian notice given after a placement, stating that the issuer has no undisclosed price-sensitive information. It is what allows the placed shares to be on-sold, and it must be given within the period the Corporations Act sets.
General mandate
The Hong Kong authority given by shareholders at a general meeting allowing directors to issue new shares up to a set proportion of issued share capital. Placements under it are also subject to a limit on the discount to the benchmarked price.
Third-party allotment
The Japanese structure in which new shares or treasury shares are allotted to a named investor rather than offered to the market. Dilution above a stated level, or a change in the controlling shareholder, triggers additional Tokyo Stock Exchange procedures.
Preferential allotment
The Indian route for issuing shares to identified investors under the SEBI ICDR Regulations, subject to a prescribed pricing formula, a lock-in on the shares issued, and shareholder approval.
Qualified institutions placement (QIP)
The Indian mechanism under the SEBI ICDR Regulations by which a listed company places securities with qualified institutional buyers only, priced by reference to a formula-based floor price rather than by free negotiation.
Pre-emption rights
The right of existing shareholders to be offered new shares before they are placed elsewhere. In the United Kingdom, the Pre-Emption Group's Statement of Principles sets the annual disapplication levels that institutions will support.
Primary sources
- U.S. Securities and Exchange Commission — Revisions to Rules 144 and 145 (small-entity compliance guide)
- U.S. Securities and Exchange Commission — Form S-3 and its General Instructions
- Nasdaq Listing Rules — Rule 5635, shareholder approval
- Ontario Securities Commission — Coordinated Blanket Order 45-935
- CSA Staff Notice 45-330 (Revised) — FAQ on the Listed Issuer Financing Exemption
- HKEX — Main Board Listing Rules, Chapter 13
Where these terms are worked through
Resale
Rule 144
The safe harbour in full: conditions, holding periods, and the issuers it does not reach.
Read the Rule 144 pillar →Instruments
Equity facilities
SEPA, SEDA and committed equity facilities compared, and how a drawdown actually works.
How an equity facility works →Market
Canada
The Listed Issuer Financing Exemption, the four-month hold, and TSXV pricing convention.
Financing Canadian issuers →If this is about a live situation
These definitions exist to be quoted. Where a term in a draft is the actual problem rather than the definition of it, the enquiry form is the shorter route.