With the government partially shut down, the SEC is following its operations plan during a shutdown, which entails an extremely limited number of staff members available to respond to emergency situations involving market integrity and investor protection, including law enforcement. While EDGAR will accept registration statements, offering statements and other filings during the shutdown, the SEC is neither screening nor reviewing filings during the shutdown. This means the Staff is not be able to declare registration statements effective nor qualify Form 1-A offering statements.
In planning for the shutdown, Corp Fin issued these FAQs that address some of the public’s questions. One of these FAQs suggests that companies may want to think about removing the “delaying amendment” from their registration statement if the SEC isn’t open, which would have the effect of declaring the registration statement effective automatically 20 days after filing. (Section 8(a) of the Securities Act provides the SEC with 20 calendar days after filing to review a registration statement before it automatically goes effective.) Removing the delaying amendment is a BIG deal for securities lawyers given how fundamental it is to the registration statement effectiveness process, and I recall being taught about the importance of these delaying amendments during my time screening registration statements as a Corp Fin staffer. On the rare occasion when a filing did not have the legend and one was needed, we would call and ask the company to file a pre-effective amendment ASAP that included it. This way, the registration statement would not go effective automatically in 20 days per Section 8(a) of the Securities Act.
For reference, the delaying amendment is on the front cover of the registration statement and states (per Rule 473):
“The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.”
Out of curiosity, I went on EDGAR today and found this S-4/A filed on January 4, 2019 that intentionally pulled its delaying amendment. As required by Rule 473(b), the delaying amendment legend was changed from the statement above to the following:
“This registration statement shall hereinafter become effective in accordance with the provisions of Section 8(a) of the Securities Act of 1933, as amended.”
If the government shutdown continues to impede capital formation and M&A activity, it will be interesting to see if others take a similar approach when possible. Of course, if the delaying amendment is removed and the government reopens during the 20-day period, it is possible the Staff may ask you to amend the registration statement to include a delaying amendment.
For questions or additional information about the SEC’s operational status contact Jay Knight or another Bass, Berry & Sims corporate and securities attorney.