Public Offerings May Continue, Despite SEC Shutdown

The SEC's Division of Corporation Finance has posted helpful FAQs about the impact of the government shutdown on registration statements for public offerings.  During the shutdown, the SEC will not declare registration statements effective, but companies still have several options that may enable them to pursue their offerings.

Well-known seasoned issuers can continue to file automatically effective registration statements, and companies with already effective shelf registration statements should be able to complete a takedown unless the terms of the offering would require the issuer to file a post-effective amendment.

In a departure from customary practice, companies also have the opportunity to file a registration statement without the standard delaying amendment contemplated by Rule 473 or, in an amendment, to replace it with a statement that the registration statement will become effective in accordance with Section 8(a) of the Securities Act of 1933.  The registration statement would then become effective by operation of law 20 calendar days after the filing.  Historically, the SEC staff has discouraged companies from using this avenue to effectiveness, since it may result in the registration statement becoming effective before the staff has completed its review process.

Because the shutdown is largely preventing the SEC staff from performing its oversight function, the FAQs acknowledge that companies should not have to wait indefinitely to complete their offerings.  The FAQs do make clear, however, that companies taking advantage of this opportunity should expect that, as soon as the shutdown ends, the staff will promptly reinstate the normal review process and ask issuers to delay effectiveness until the staff has completed its review.  Companies seeking to proceed without the delaying amendment should consult with counsel to better understand the risks of taking this approach.

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