Last week, I blogged that if a shutdown happens, it feels like it could last longer than the typical shutdown given the politics involved. The shutdown is now here – and Corp Fin posted this note late yesterday afternoon saying that it can’t declare registration statements effective starting October 1st, as well as this set of 22 FAQs that mirror the FAQs posted by Corp Fin back in March (with one change to FAQ #11 to delete the sentence re: “factor to consider may include…”). In addition, here is the SEC’s “operations plan during a shutdown” guidance.
Under this set of 22 FAQs, here’s the state of play during the shutdown (also see this blog by Liz Dunshee over on Cooley’s “CapitalXchange” Blog):
- You can file definitive proxies without staff reviewing the preliminary proxy: Under Corp Fin’s FAQ #16, companies can file definitive proxy materials after the 10-day preliminary statement period without a staff response – but the staff can step in and review preliminary statements if the shutdown ends and your 10-day clock hasn’t ended yet.
- The Rule 14a-8 no-action review process stalls: During a shutdown, under FAQ #19, Corp Fin can’t review or respond to Rule 14a-8 requests. Companies and proponents can try to resolve issues on their own if feasible. Companies might consider noting in their proxy that a Rule 14a-8 no-action request is pending with the staff if the shutdown is ongoing when they file it.
- Staff can’t provide much guidance: During a shutdown, under FAQ #20, the staff isn’t able to provide written or oral guidance on legal or interpretative questions (including Rule 14a-8 no-action letters) – with the one exception that emergency relief requests under Rule 3-13 of Regulation S-X may be considered as noted in FAQ #15.
- EDGAR will be available: Under FAQ #13, EDGAR will continue to operate during a shutdown, including accepting registration statements, offering statements and all other filings.
- Registration effectiveness stalled: Once the shutdown begins, under FAQ #2, Corp Fin can’t declare registration statements effective (including post-effective amendments) or qualify Form 1-A offering statements.
FAQs #7, 11, 12, 14, 21 and 22 provide a bunch of guidance about issuers that elect to remove delaying amendments during the shutdown – or file new registration statements without a delaying amendment – including noting that there are risks associated with that (and that the staff likely will request that they be reinstated once the shutdown ends).
Issuers with substantially complete pending registration statements or Form 1-A offering statements should submit acceleration or qualification requests right away. Under FAQs #5 and 6, the staff may grant acceleration and qualification requests – before a shutdown begins – even without FINRA’s “no objections” statement if the underwriters confirm they won’t execute agreements or confirm sales until receiving FINRA’s clearance. - Post-effective amendments stalled – so consider pro supps: During a shutdown, issuers can file post-effective amendments on EDGAR but the staff can’t declare them effective. Issuers might consider whether they can update their registration statements via a prospectus supplement instead.
- Shelf takedowns permitted: FAQ #17 reminds us that a prospectus supplement doesn’t need to be declared effective by the staff – so shelf takedowns are permitted during a shutdown.
- Rule 430(a) pricing window can be restarted: Under FAQ #10, if an issuer misses the 15-day pricing window under Rule 430(a), they may file Rule 462(c) post-effective amendments to restart the period, enabling pricing information to be included in Rule 424(b) prospectus supplements.
- “Business days” are “business days” regardless of the shutdown: FAQ #18 confirms that a “business day” means any day other than a Saturday, Sunday or federal holiday, regardless of a shutdown being in effect.
Authored by
Broc Romanek