If U.S. congressional leaders are unable to resolve the current federal budget standoff, it is expected that much of the federal government, including the U.S. Securities and Exchange Commission (SEC), would shut down soon after the government’s September 30th fiscal year end. We encourage all public reporting companies to monitor the SEC’s website (http://www.sec.gov) for the latest information regarding a shutdown and the status of SEC operations.
On September 27, 2023, the SEC’s Division of Corporation Finance published a summary of anticipated impacts ahead of a potential government shutdown, along with guidance for public reporting companies who have or are contemplating filings during such time. While we summarize the material points of the guidance in this alert, companies should also review the full text available here to determine any potential impacts on their transactions and other SEC-related activities. In addition, on September 29, 2023, the Division of Corporation Finance announced that after 5:30p.m. ET that day, it would not be in a position to act upon requests for acceleration of registration statements or qualification requests for offering statements until the SEC receives appropriations funding its operations. It provided guidance for filers that would like the Division of Corporation Finance to consider a request for acceleration or qualification on September 29.
In the event of a shutdown, the SEC’s activities will be limited. This is because agencies are prohibited from continued operations in the absence of appropriations, subject to certain narrow exceptions, such as the protection of property. Of specific concern to companies seeking to raise capital or engage in other securities transactions, the Division of Corporation Finance staff will not be available to declare registration statements effective or to qualify offering statements, or otherwise process those filings. Thus, companies will not receive comments on pending filings during a shutdown. In addition, the staff will not respond to interpretive questions or exemptive requests. No-action requests, including Rule 14a-8 no-action requests, will not be processed and rulemaking activities will cease. In emergency situations, companies can email the staff to provide information about the emergency and request assistance.
The EDGAR system would remain operational and public reporting companies should continue to file all routine reports, including Forms 8-K, 10-Q, and 10-K; Section 16 reports; and definitive proxy statements for annual meetings. A government shutdown would not change what constitutes a “business day” for purposes of reporting obligations. Public companies would be able to file registration statements that are automatically effective upon filing (e.g., Forms S-8, S-3ASR, and certain post-effective amendments) or prospectus supplements related to effective registration statements. It is anticipated that SEC staff will be available to assist with Form ID requests and generating new or replacement EDGAR codes, but availability may be limited.
Filings that are not automatically effective or that are subject to SEC review—such as registration statements on Forms S-1 or S-3, tender offer statements, or preliminary proxy statements—would not be processed during a government shutdown. Companies should expect significant delays in processing even once the shutdown has ended. Public reporting companies contemplating filing a non-automatically effective registration statement during a shutdown may consider filing it without the customary “delaying amendment.” The liability and antifraud provisions of the federal securities laws would apply. A company seeking to avail itself of this option should include all of the information required by the form and the following language provided by Rule 473(b): “This registration statement shall hereafter become effective in accordance with the provisions of section 8(a) of the Securities Act of 1933.” This would allow the registration statement to become automatically effective after 20 days; however, if the SEC becomes operational during that period, the SEC may ask the company to amend the registration statement amendment to include the delaying amendment. In addition, once the SEC is operational, it may request amendments to registration statements that went effective while it was shut down.
Public reporting companies currently involved in an active SEC review or comment process, or that are otherwise engaged in ongoing communication with the SEC’s staff, should contact their examiner as soon as practicable to discuss the status of the SEC’s review and potential options during a government shutdown.
For any questions or more information on these or any related matters, please contact your regular Wilson Sonsini Goodrich & Rosati contact or any member of the firm’s capital markets or public company practices.
Tamara Brightwell, Richard Blake, Jose Macias, Michael Nordtvedt, Rezwan Pavri, Douglas Schnell, Allison Spinner, Lisa Stimmell, Amanda Urquiza, and Heath DeJean contributed to this Wilson Sonsini Alert.
