- within Corporate/Commercial Law and Insurance topic(s)
As Congress grapples with enacting appropriations by September 30, 2025, to avoid a government shutdown, companies in the process of going public must begin to consider how the operations of the Securities and Exchange Commission (the "SEC") will be impacted by a shutdown. Although the SEC's Division of Corporation Finance (the "Division") is yet to issue new guidance, the Division has issued guidance in previous instances of a looming shutdown, most recently in March this year.
To help IPO companies prepare for a possible shutdown, pending new guidance from the Division, we summarize key points from the Division's March guidance, as well as the SEC's operations plan during a shutdown that will impact IPO companies. Importantly, based on prior guidance, although EDGAR will be fully operational during a shutdown, the Division's operations will be extremely limited. Specifically, the Division will not be able to accelerate the effectiveness of registration statements and will not review or comment on filings.
Key IPO Impacts
- The Division staff will suspend review of all IPO registration statements, including confidentially submitted draft registration statements.
- The Division staff will not declare effective any IPO
registration statements or post-effective amendments or issue any
registration statement comments (including to address outstanding
comments) during a shutdown.
- However, IPO companies with effective registration statements who are unable to price within 15 business days of effectiveness (as required by SEC rules) may restart the 15-day clock by filing a post-effective amendment that does not include any substantive changes, which is effective upon filing.
- IPO companies with substantially complete, but not-yet-effective, registration statements should consider requesting registration statement effectiveness as soon as possible before a shutdown if market conditions are favorable—acceleration requests will be considered even without a FINRA "no objections letter" if the underwriters confirm they will not execute an underwriting agreement or confirm sales until the FINRA letter is received.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
