SEC Division of Corporation Finance Guidance for a Potential Government Shutdown

The SEC’s Division of Corporation Finance has posted information about its anticipated operations in the event of a government shutdown here. We addressed the SEC’s shutdown plan earlier this year in the face of an anticipated government shutdown that did not occur. Please see our previous alert here.

The SEC will be closed on December 24th and 25th in observance of the holiday. No EDGAR filings will be accepted those days, as is the case on any Federal holiday.

In the event that an legislation funding the government is not enacted and a government shutdown occurs, the SEC anticipates that it will remain fully operational for a limited number of days beyond the start of the government shutdown. While open during this time period, the SEC will conduct ordinary business. The SEC will try to provide advance notice of when its operations will cease due to the shutdown. EDGAR will continue to accept registration statements, offering statements and any other required filings, regardless of the SEC’s operating status.

Requests for Acceleration or Qualification

Once the SEC’s operations cease due to a government shutdown, the Staff will not be able to declare registration statements effective nor qualify Form 1-A offering statements. Given the uncertainty as to the timing of when the SEC’s operating status will change, the Staff suggests that an issuer may want to submit a request for acceleration or qualification while the SEC is open and operating, if that issuer has a pending registration statement or Form 1-A offering statement on file for an offering or merger that needs to proceed in the near future. The Staff indicates that it will work with issuers to resolve outstanding issues. The Staff also indicates that, in a situation where the required “no objections” statement from FINRA has not yet been obtained, the Staff will consider granting requests for acceleration or qualification if the underwriters confirm in their request that they will not execute the underwriting agreement or confirm sales of the registered securities until they receive that statement from FINRA. 

Updating an Effective Registration Statement or a Qualified Form 1-A

If an issuer has an effective registration statement and determines that it must update the information in the prospectus included in the registration statement before commencing the offering, the Staff indicates that the issuer should not go forward with the offering before updating the prospectus, and the issuer and its representatives will have to decide whether the issuer can update the prospectus without filing a post-effective amendment. If the SEC is not open, the issuer can file a post-effective amendment on EDGAR, but the Staff will not be in a position to declare that amendment effective. The same considerations apply in the case of a previously qualified Form 1-A.

Pricing Information

If an issuer does not price an offering within the 15-day time period provided in Rule 430(a), the Staff indicates that the issuer may file post-effective amendments, as necessary, under Rule 462(c) to restart the 15-business-day period so that, at the time of pricing, the issuer will be able to include the pricing information in a Rule 424(b) prospectus supplement. The Staff notes that post-effective amendments filed pursuant to Rule 462(c) are effective upon filing. Alternately, the Staff indicates that, at the time of pricing, the issuer could file a post-effective amendment under Rule 462(c), prior to the time confirmations are sent or given, to include the information omitted under Rule 430(a). The Staff notes, however, that an issuer cannot rely on Rule 462(c) to include pricing information if the post-effective amendment includes substantive changes from, or additions to, the prospectus in the effective registration statement.

Delaying Amendments

The Staff notes that an issuer can elect to amend to remove a delaying amendment while the SEC is open and operational; however, if the Staff has not yet cleared outstanding comments, the Staff may request that the issuer amend the filing to include the delaying amendment. If the SEC is not open, the Staff notes that an issuer can file an amendment to remove the delaying amendment, and the registration statement will not become effective until 20 days have passed. If the SEC’s operational status does not change and the issuer wishes to further delay the effective date of the registration statement, the issuer may file another pre-effective amendment during the 20-day period, because the registration statement would not become effective until 20 days after the latest pre-effective amendment that does not include a delaying amendment. If the SEC’s operating status changes to operational and the registration statement is not yet effective because the 20 days have not run, the Staff would consider a request to accelerate to an earlier date. The Staff indicates that it may ask the issuer to amend the registration statement to include the delaying amendment.

We will continue to monitor the SEC’s operating status and provide updates as they become available.