If the Government Shuts Down, Corp Fin Will Barely Function

We barely avoided a federal government shutdown, but it still could happen 45 days hence since what Congress funded was a stopgap measure. If there is a shutdown in mid-November, the SEC would be operating in accordance with this operations plan. Late last week, Corp Fin posted this announcement that includes 22 FAQs to inform us that its activities would be extremely limited during a shutdown, just like during other shutdowns (the guidance is similar to the guidance provided during those other shutdowns).

Here are seven things to know from the FAQs:

1. Edgar Would Still Be Open – Edgar would still continue to function normally and accept filings (FAQ #13).
    
2. The Staff Would Not Declare Registration Statements Effective – Under FAQ #15, the Staff wouldn't be able to declare registration statements effective. The first group of the FAQs is about working to get your deals done before a shutdown occurs - if you're doing a deal, you should read those ahead of the next possible shutdown.
    
3. Removing "Delaying Amendments" Would Be Risky – You need the Staff to accelerate effectiveness of a registration statement because a "delaying amendment" was included in it. If you file an amendment of the registration statement to specifically remove a delaying amendment - you need specific "magic" language in that amendment to accomplish that - so that it would go automatically effective in 20 days, that is technically feasible – but the Staff warns of the risks involved in doing so (FAQs #11-12). The Staff notes the risks include the liability and antifraud provisions of the federal securities laws, as well as include whether the company is Form S-3 eligible, whether the company is a repeat issuer, whether the registration statement is subject to review, and whether significant unresolved staff comments remain outstanding. The SEC is still able to issue a stop order during a shutdown if it decides it wants to stop a registration statement from automatically becoming effective.
   
   If you do remove a delaying amendment - or file a registration statement without one - and Corp Fin's operating status changes due to the end of a shutdown, the Staff likely will contact you to add one (FAQs #21-22).
    
4. "Shutdown Days" Are Considered "Business Days" - For purposes of figuring out the timing of filing things like Form 8-Ks and Form 4s, the fact that the government is shut down doesn't change a business day into a weekend or holiday (FAQ #18).
    
5. You Can File Definitive Proxies After Filing a Preliminary One Without Hearing From the Staff – If you have a proxy that meets the criteria that it first needs to be filed in preliminary form, you can file a definitive proxy after 10 calendar days without hearing from the Staff during a shutdown (FAQ #16).
    
6. Shareholder Proposal (and Other) No-Action Requests Wouldn't Be Processed – The Staff won't be processing Rule 14a-8 or other no-action requests during a shutdown. FAQ #19 asks that companies and proponents work together to resolve questions in the absence of the normal Rule 14a-8 process.
    
7. The SEC Wouldn't Be Adopting Any Rules - The SEC won't be conducting any of its normal rulemaking activities during a shutdown (although the SEC's website would still accept comment letters on proposals; but I'm not sure if they would be posted until the shutdown was over). I wonder if this means the climate rules will be adopted before the next possible shutdown...