If U.S. congressional leaders are unable to pass legislation for continued government funding, 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 current continuing resolution for agency appropriations ends on December 20, 2024. We encourage all public reporting companies to monitor the SEC’s website (http://www.sec.gov) for the latest information regarding the status of SEC operations.
On December 13, 2024, the SEC’s Division of Corporation Finance published an announcement to provide guidance to companies in advance of a potential federal government shutdown. While we summarize the material points of the guidance in this alert, companies should review the full text available here to determine any potential impacts on their transactions and other SEC-related activities.
In the event of a shutdown, the SEC’s activities will be limited because federal agencies are prohibited from continuing operations in the absence of appropriations, subject to certain narrow exceptions, such as the protection of property. Companies seeking to raise capital or engage in other securities transactions should note that 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.1 Filings that are not automatically effective or that are subject to SEC staff review—such as registration statements on Forms S-1 or S-3, tender offer statements, or preliminary proxy statements—would not be reviewed or processed during a government shutdown. Companies will not receive comments on pending filings during a shutdown and should expect significant delays in processing once the shutdown has ended. In addition, the staff will not respond to interpretive questions or exemptive requests during a shutdown. 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 at CFEmergency@sec.gov 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; Rule 144 notices; 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) and 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.
[1] The Division of Corporation Finance’s guidance includes questions and answers regarding filing registration statements without a delaying amendment, as well as proceeding with a definitive proxy statement at least 10 days after filing a definitive proxy statement. The guidance cautions companies about the risks of these actions and the factors to consider. It also notes that the staff may issue comments after the end of a shutdown or request that a company amend a registration statement to include a delaying amendment. Companies should discuss their situation with counsel prior to taking such actions.