You’ll recall that, at the end of last year prior to the shutdown, Corp Fin posted a series of FAQs designed to help companies in the registration process (or contemplating offerings) but expected to be caught in the shutdown. (See this PubCo post.) Corp Fin has now updated those FAQs, revising numbers 4 and 5 and adding new numbers 6 and 9, briefly summarized below. (The mystery is how Corp Fin was able to prepare the updates if no one was permitted to work?)
- If a registration statement was declared effective prior to the shutdown, but the offering was not priced within the 15-day time period provided in Rule 430A, the company can still use Rule 430A (and that’s because the registration statement was declared effective prior to the shutdown), and may file post-effective amendments, as necessary, under Rule 462(c) to restart the 15-business-day period. (Post-effective amendments filed pursuant to Rule 462(c) are effective upon filing.) As a result, at the time of pricing, the company will be able to include the pricing information in a 424(b) prospectus supplement. Alternatively, at the time of pricing, the company 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 430A. However, the company cannot rely on Rule 462(c) to include the pricing information if the post-effective amendment includes substantive changes from, or additions to, the prospectus in the effective registration statement.
- Even though the shutdown continues in effect, a company can still file an amendment to a current registration statement to remove the delaying amendment, with the result that the registration statement will become effective after 20 days have passed. If the shutdown continues, the company can further delay the effective date by filing another pre-effective amendment during the 20-day period—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 shutdown ends and the registration statement is not yet effective, the SEC would consider a request to accelerate to an earlier date, but it may request an amendment to restore the delaying amendment. Corp Fin notes that just omitting the delaying amendment will not begin the 20-day period. A company that intends to remove the delaying amendment must include the following language, from Rule 473(b), on the registration statement: “This registration statement shall hereafter become effective in accordance with the provisions of section 8(a) of the Securities Act of 1933.” It must also amend to include all information required by the form, including the price of the securities it will sell. Rule 430A is not available in the absence of a delaying amendment because Rule 430A is available only with respect to registration statements that have been declared effective by the SEC or the staff.
- Even though a company still has open, unresolved staff comments on its filings, the company can still amend its registration statement to remove the delaying amendment. However, as always, “responsibility for complete and accurate disclosure lies with the company and others involved in the preparation of a company’s filings.” If the shutdown ends prior to the effective date, the SEC may ask for an amendment to include the delaying amendment to allow the staff to work with the company to resolve outstanding comments.
- Even during the shutdown, Corp Fin may consider a request for emergency relief under Rule 3-13 of Reg S-X. Although the Antideficiency Act generally prohibits agencies from continued operation in the absence of appropriations, one of the exceptions is for emergencies that involve “some reasonable likelihood that the protection of property would be compromised, in some significant degree, by delay in the performance of the function in question.” In that type of emergency, Corp Fin may grant an application where consistent with the limitations. Requests should go to CFEmergency@sec.gov and should describe the emergency and the significant property interest to be protected.
You might remember that Rule 3-13 has been touted by the staff in the last couple of years as a mechanism through which companies may obtain waivers to modify burdensome financial reporting requirements. In various speeches, Chair Clayton and others encouraged the use of the process in the event that mandated disclosures were burdensome to generate, but may not be material to the total mix of information available to investors. (See this PubCo post.)
In this context, however, the limitation to protection of property may hobble the availability of the waiver process. Another exception in the Antideficiency Act is the safety of human life. These two exceptions are generally the basis on which “essential” government functions, such as air-traffic controllers, can keep operating through a shutdown. Even voluntary services are generally prohibited, outside of the exceptions.