January 13, 2019
In light of the federal government shutdown commencing on December 22, 2018, the U.S. Securities and Exchange Commission (“SEC”) remains leanly staffed. This has caused delay in staff’s review of registration statements and other filings, and the SEC will not be able to declare any registration statements effective during the shutdown. Nevertheless, regardless of the SEC’s operational status, EDGAR will still accept filings.
The Division of Corporation Finance (“Corp Fin”) of the SEC has published a set of FAQs online to address its actions during the shutdown. A detailed Operations Plan with emergency contacts are also available.
Depending on the type of offering or transaction a client is seeking to complete, Corp Fin’s inability to timely review a filing may have a negative impact on the ability of the parties to complete the offering or transaction.
For an IPO on Form S-1 or F-1, we believe that now is a good time for the company to direct attention to issues that are outstanding. Once handled, even though it is unclear how the SEC will prioritize its workload once the staff resumes work, it is still advisable to file with the SEC and to “get in line”, so to speak.
A non-WKSI issuer on Form S-3 or F-3 can file a registration statement without a delaying amendment and achieve effectiveness automatically 20 calendar days after such filing pursuant to Section 8(a) of the Securities Act of 1933. If an issuer has already filed a registration statement with a delaying amendment, it can file a further amendment to remove the delaying amendment language. The registration statement will then become effective after 20 calendar days of such filing. Note that once it becomes operational again, the SEC may request the issuer to file another amendment to restore the delaying amendment if the registration statement is not yet effective.
Other filings that normally become effective automatically will continue to become effective upon filing.
The SEC cautions that a company with an effective registration statement should not commence any offering if the company determines that it needs to update information in the prospectus. Clients should consult with securities counsel in deciding on whether a post-effective amendment should be filed, because the SEC staff will not be able to declare the amendment effective during the shutdown.
Although we do not believe the government will remain shut down for an extensive period of time, for those clients who cannot or are not willing to wait for the government to reopen and to catch up, we are available to discuss alternative options with you, based on your situation.
Should you have any questions or concerns, please feel free to contact us.