Public companies haven’t been furloughed from their filing and disclosure obligations under federal securities laws, notwithstanding that portions of the federal government, including the SEC, are operating at reduced functionality during the ongoing partial government shutdown.

Below are ten key takeaways that CEOs, CFOs, GCs and others involved in reporting or capital raising at public companies need to know.

  1. Your filing and other disclosure obligations and deadlines are unchanged. Legal obligations are unchanged during the shutdown. Filing deadlines for mandatory disclosures remain the same, and rules regarding disclosure, such as Regulation FD and Rule 10b-5, are in full force.

  2. EDGAR is “all systems go!” EDGAR is fully operational and accepting filings of all kinds.

  3. There is no effect on periodic and current reports. There is no effect on periodic and current reports, as these reports are effective upon filing with no SEC action or waiting period required. The SEC is not, however, currently conducting reviews of or issuing comment letters on periodic reports.

  4. For preliminary proxies, silence remains golden. The SEC is not reviewing preliminary proxy statements during the shutdown. The applicable rules remain unchanged, however. A company is still free to transmit definitive copies of its proxy statement if, after 10 days, it has not received affirmative notice from the SEC that the preliminary proxy will be reviewed (and it won’t be while the shutdown continues).

  5. But, the silence may be deafening for Rule 14a-8 no-action requests on shareholder proposals. The SEC is also not processing requests for confirmation that the SEC will take “no action” if a company excludes a shareholder proposal from its proxy. Depending on the length of the shutdown and annual meeting timelines, some companies may need to make a decision with respect to including or excluding a shareholder proposal, and how to implement either decision, without the benefit of SEC input. This creates a myriad of novel risks for a company in receipt of a shareholder proposal. For example, if the proposal is excluded, post-shutdown disagreement with the company’s decision by the SEC could lead to meeting delays, SEC enforcement action, or emboldened dissident shareholders and plaintiffs’ attorneys.

  6. Automatically effective registration statements are…still automatic! The shutdown has no effect on the filing or use of registration statements that become effective automatically upon filing without any SEC action. These registration statements include Forms S-3ASR (available to well-known seasoned issuers), S-3D (used for dividend reinvestment plans), and S-8 (for employee benefit plans).

  7. Non-automatically effective registration statements are…trickier! Ordinarily, Forms S-1, S-3 and S-4 may not be brought effective without an affirmative SEC action in response to a request for acceleration of effectiveness (often after responding to one or more rounds of SEC comments on the registration statement). During the shutdown, the SEC is not reviewing registration statements, processing responses to existing comment letters on existing registration statements, or responding to acceleration requests. This obviously throws several wrenches into the ordinary process. Companies wishing to use a new, non-automatically effective registration statement basically have two options:

      • Option one – If a company can afford the delay and uncertainty, wait for the shutdown to end and for SEC practice to return to normal.

      • Option two – If capital or other transactional needs dictate, a company can take certain technical steps under recently issued SEC guidance to cause a non-automatically effective registration statement to become effective without SEC action 20 days after such steps are taken.This is true even if there are outstanding, unresolved comments from the SEC regarding the registration statement, although the responsibility for complete and accurate disclosure would still lie with the company and others involved in the preparation of the registration statement (a point the SEC has emphasized in its shutdown-related guidance).The SEC has also expressly stated that if its operating status changes before the expiration of this 20-day period, it may ask companies to further amend registration statements to return their processing to the normal procedure requiring SEC approval of effectiveness.Any company considering “option two” will need to think through the issues carefully and in consultation with counsel and all members of the relevant working group. This path to effectiveness would require careful adherence to the technical aspects of the SEC’s shutdown guidance. More importantly, the company and other working group participants would need to reach a consensus on the relative costs and benefits (e.g., the risk of future SEC action or other legal exposure from moving forward in the face of unresolved SEC comments versus the cost of delay).

  8. Another good reason to have a universal shelf registration statement in place. Shelf takedowns from effective registration statements are unaffected by the shutdown, as the Rule 424 filings used to effect such offerings are not subject to SEC review or action.

  9. Sweet 16. EDGAR is still accepting Section 16 reports, and the deadlines for filing such reports are unchanged. At present, the SEC is still processing Form ID requests for filing codes for new Section 16 officers on a normal timeline (i.e., one to two business days). Further, the SEC’s filer support staff are still available to answer questions at this time.

  10. Stay up to date on current SEC guidance and market practice. This historically long shutdown is creating novel substantive and practical challenges that the SEC and public companies will, necessarily, have to feel their way through to some extent. SEC guidance and market practice may change over time.