Although Friday brought news of a funding deal and suggestions that the current shutdown isn’t *supposed to* continue past today or tomorrow, Corp Fin Staff posted pre-shutdown guidance late Friday afternoon. (The Staff has to wait for the green light from elsewhere in the government to be able to post that guidance.)
In terms of how this guidance compares to the last shutdown:
– It continues to reflect the helpful update Corp Fin released a week into the last shutdown regarding reliance on Rule 430A to omit your offering price when filing a registration statement that would become effective after 20 days pursuant to Section 8(a).
– It now addresses another pain point from the last shutdown relating to upsizing an offering using Rule 462(b). New Q&A 13 says:
Q: Can I rely on Rule 462(b) to file a registration statement that becomes effective upon filing to register additional securities of the same class(es) as were included in an earlier registration statement for the same offering if the earlier registration statement went effective by operation of law pursuant to Section 8(a) of the Securities Act?
A: Because the staff will not be available to review or accelerate the effectiveness of registration statements during the shutdown, as long as the other conditions of Rule 462(b) are met, we will not recommend enforcement action to the Commission if a company relies on Rule 462(b) when the earlier registration statement went effective by operation of law due to staff being unavailable to review or accelerate effectiveness during the shutdown.
– It also formalizes guidance that the Staff had informally shared earlier last week — that it was willing to accelerate registration statement effectiveness for IPO issuers that had cleared comments and flipped public but were still waiting for the 15 days to run if they requested effectiveness as of 4 pm ET or later on Friday, January 30, prior to the shutdown. New Q&A 8 reads:
Q: I originally submitted a draft registration statement for confidential review and subsequently filed the registration statement, and all non-public draft submissions, publicly. The 15-day waiting period referenced in Section 6(e)(1) of the Securities Act and the Division’s Enhanced Accommodations for Issuers Submitting Draft Registration Statements (March 3, 2025) will not expire prior to the shutdown. Will the Division consider an acceleration request?
A: Yes, if the company has publicly filed the registration statement and all non-public draft submissions, the Division will consider a request for acceleration as long as (1) there are no outstanding staff comments on the registration statement, (2) the company requests acceleration of effectiveness as of 4:00 p.m. or later on the final business day (Friday, January 30, 2026) prior to the shutdown, and (3) the company represents in its request for acceleration that it will not commence a road show or, in the absence of a road show, conduct any sales, until at least 15 days after it filed the registration statement publicly. A company considering this option should submit its acceleration request as soon as possible.
Hopefully, to the extent this was relevant to issuers, their counsel was in contact with the Staff before this guidance came out or was able to move quickly once it went live. While it seems this opportunity has expired, it’s something to keep in mind for the next shutdown. It’s also yet another example of Corp Fin Staff’s willingness to make reasonable accommodations so deals can get across the finish line despite shutdown roadblocks. (And evidence, more generally, of the Staff continuing to show its commitment to facilitating capital formation.)
* Senate Democrats and the White House reached an agreement late last week to fund most of the federal government until September 30 and fund the Department of Homeland Security for 2 weeks while discussions continue on immigration enforcement. Appropriations still lapsed as of 12:01 Saturday morning because the modified, Senate-approved spending package has to go back to the House, which is supposed to vote tonight or tomorrow. If it passes (it could go either way), it won’t be the shortest shutdown ever (which lasted a mere 6ish hours), but at least it will mean avoiding the challenges that come with the SEC being furloughed for weeks.
Last month, NYSE American filed a proposal with the SEC to amend its initial listing requirements (historically viewed as more flexible) to closely align with Nasdaq’s by adding a new minimum market value, focusing on unrestricted publicly held shares, and increasing the minimum listing price. This Morgan Lewis alert describes the changes. Here are two excerpts:
Under NYSE American’s proposal, each of the four initial listing standards in Section 101 would be amended to require a minimum market value of Unrestricted Publicly-Held shares at the $15 million level for standards 1, 2, and 3, and $20 million for standard 4. Any company listing in connection with an IPO or other underwritten public offering would be required to satisfy the Unrestricted Publicly-Held Shares requirement solely from offering proceeds. “Restricted Securities,” even if not held by insiders or 10% holders, would no longer count toward satisfaction of this requirement.
NYSE American’s proposal would also impose a uniform $4.00 minimum initial listing price across all initial listing standards. This represents an increase from current NYSE American requirements, which permit minimum initial listing prices of $2.00 or $3.00 per share depending on the applicable listing standard.
Once approved (the SEC hasn’t posted this proposal for notice & comment on its website yet), these changes will make it harder for companies to list on NYSE American, with broader implications for the market — and for the goal of getting more companies to go public.
Historically, issuers have chosen NYSE American in part because its initial listing standards offered greater flexibility than those of Nasdaq, particularly with respect to liquidity, public float composition, and the ability to rely on legacy or resale shares to satisfy listing requirements. Such flexibility has made NYSE American an attractive venue for smaller or earlier-stage companies, companies with significant insider or employee ownership, and issuers seeking to limit dilution by keeping primary offerings smaller at the time of listing.
The proposed changes would significantly narrow that flexibility. Employee equity and other outstanding shares would no longer support initial listing eligibility as shares issued under employee equity plans, shares subject to lockups, or other restricted securities would not count toward initial listing liquidity thresholds.
Issuers listing in connection with an IPO would need to size their offerings to independently satisfy the $15 million market value of unrestricted publicly held shares requirement, potentially requiring larger primary offerings and resulting in increased dilution. Further, by requiring liquidity thresholds to be met using only unrestricted publicly held shares, the proposal would reduce the ability of issuers to structure listings around resale or legacy float and further narrow the practical differences between NYSE American and Nasdaq with respect to initial listing liquidity standards.
With Nasdaq’s many proposals to tighten listing standards and purge the exchange of stocks that maybe shouldn’t be listed on an exchange anymore — or ever have been listed in the first place, it seems to be getting dicey out there for microcap companies. I understand why the exchanges are pursuing these updates, but there’s also the SEC’s goal of bringing back small-cap IPOs to think about.
On Friday, the SEC announced the appointments of Demetrios (Jim) Logothetis as Chairman and Mark Calabria, Kyle Hauptman, and Steven Laughton as Board members of the PCAOB. The SEC stated that George Botic will continue to serve as a Board member and will remain Acting Chairman until Mr. Logothetis is sworn in.
Demetrios (Jim) Logothetis serves on the board of The Republic Bank of Chicago and on the advisory council of a privately owned consultancy firm. He previously spent 40 years at E&Y.
Mark Calabria is currently an Associate Director and Chief Statistician with the U.S. Office of Management and Budget and a Senior Advisor to the Office of the Director of the Consumer Financial Protection Bureau.
Kyle Hauptman is currently the Chairman of the National Credit Union Administration. He previously served on the Senate Banking Committee staff, as a staff director and as Economic Policy Counselor to a senator.
Steven Laughton is currently Board Counsel to PCAOB Board Member Christina Ho. He spent more than thirty years with the U.S. Department of the Treasury, including as Senior Counsel to the General Counsel.
In Chairman Atkins’s statement, he thanked the current board members and noted that the transition to the new board will occur very quickly over the next few weeks.
Last month, John observed that “DExit” hasn’t been a stampede by any stretch, based on the (limited) number of reincorporation proposals and high percentage of Delaware-incorporated IPOs that occurred in 2024 and 2025.
A recently published dataset for entity formations, gathered by Professor Andrew Verstein at the UCLA School of Law, takes that one step further – Delaware experienced a “sharp increase” in incorporations in 2025, on an absolute basis as well as relative to other states. Here’s more detail from this HLS blog:
The Corporate Census is a draft paper and accompanying dataset that tracks entity formation in the United States. It presents a near-complete dataset of entity formations — including corporations, LLCs, and other business forms — for all U.S. states, dating back to the nation’s founding. It allows entity-by-entity, week-by-week, analyses and comparisons across states. The database includes about 100 million formations and allows for granular, longitudinal analysis of state popularity, entity-type trends, and legal or economic shocks.
And:
About 30% more Delaware corporations formed in 2025 than in 2024, greatly exceeding the prior trendline. This, while national incorporation levels remained flat.
This was an absolute increase, not driven by a decline in formation in other states. While Delaware averaged 1090 new corporations per week in 2020-24, that number increased by 309 in 2025. The rest of the nation as a whole enjoyed no statistically significant increase in corporate formation, nor did any other state individually. Plainly, something happened in 2024 or was anticipated for 2025 that rendered Delaware more attractive as a site of formation in 2025.
I was on the edge of my seat after reading that line, but the paper doesn’t arrive at any firm conclusion about what may have driven Delaware’s popularity last year, and we also can’t predict for sure whether the trend will continue. Nevertheless, it’s helpful to have numbers, instead of just “vibes,” about where Delaware stands.
We’ve known for a while that companies have been staying private longer and raising lots of capital along the way. The recent report from the SEC’s Office of the Advocate for Small Business Capital Formation confirmed that once again. The Staff found:
– The number of comapnies remaining private eight years or more after receiving their first VC round had quadrupled from 2014 to 2024, and
– 45% of unicorns are 9+ years old.
But hope springs eternal, and 2026 may be the year when more of them (finally, hopefully) move forward with a public debut.
These mega deals bring a different dynamic to the table when it comes to structuring the IPO and everything that goes into it. For example, this article from The Information gives a reminder that “innovative” lockups are on the table. Here’s an excerpt:
At least two large banks largely ruled out a standard IPO lockup period of either 90 to 180 days and are discussing how to design a staggered lockup release for the companies.
. . .
One option is staggering the dates to prevent a wave of selling on one day. IPO bankers and lawyers said investors could be allowed to sell a portion of their holdings every 20 to 30 days. Releases can also be triggered when the stock hits a certain price, they said.
The article notes that some companies that are believed to be in the pipeline have raised tens of billions of dollars privately. So, banks are looking to mitigate the risk of a mass selloff while also giving key insiders a path to liquidity.
Lockup variations aren’t unprecedented. Overall, underwriters have gotten more comfortable with early release mechanisms and see them as a tool to help with public float – e.g., early release based on stock price performance (as noted above), accommodating a release if the lockup is set to expire during a quarterly blackout period, or both. But there are still sensitivities, especially close to the IPO. Keep in mind that immediate sales might have collateral impacts on Section 11 liability as well – which is something I blogged about a few years ago in the lockup context. Meredith gave an update last summer on where this theory stands.
In this 21-minute episode of the Women Governance Trailblazers podcast, Courtney Kamlet and I spoke with Wei Chen – who serves as Chief Legal Officer and Executive Vice President of Government Affairs at Infoblox, and also founded The Atticus Project. We discussed:
1. Key leadership lessons that have shaped Wei’s approach to governance and compliance across different corporate cultures.
2. Wei’s vision for The Atticus Project to use AI tools to transform contract review and M&A diligence in corporate legal environments.
3. Practices boards can adopt to oversee technology risks and opportunities — including how to prepare for evolving regulations and use cases.
4. How governance professionals can credibly add value to corporate AI practices, in order to encourage responsible use of AI while also harnessing opportunities.
5. Wei’s vision for how AI will reshape corporate governance and the role of legal advisors in the next 5-10 years, and Wei’s advice for the next generation of women governance trailblazers.
To listen to any of our prior episodes of Women Governance Trailblazers, visit the podcast page on TheCorporateCounsel.net or use your favorite podcast app. If there are governance trailblazers whose career paths and perspectives you’d like to hear more about, Courtney and I always appreciate recommendations! Drop me an email at liz@thecorporatecounsel.net.
As of the time of this blog, it’s looking pretty likely that our government will shut down this weekend. I’m not sure whether to call it “good news” that we still have muscle memory from the last time around – but if nothing else, those recent experiences help us know what to expect. As a refresher:
– Ahead of the shutdown, we typically see the SEC post an operations plan and the Corp Fin Staff post pre-shutdown guidance – the August/September 2025 documents are here and here, respectively. The catch is that the Staff has to wait for the green light from elsewhere in the government to be able to post the guidance – and with the last go-round, that came very late in the game.
– Last time, the Corp Fin Staff provided a helpful update mid-shutdown, which we expect to carry forward, and I won’t be too surprised if the guidance also addresses some other pain points that were under discussion last fall.
– The exchanges are likely to step into more of a gatekeeping role.
– The Staff is still working through a large backlog of registration statement reviews, which is affecting turnaround times. Those will continue to pile up if the Staff gets furloughed again. A shutdown may also affect rulemaking priorities.
– Thankfully, this year’s Rule 14a-8 process means that the shutdown won’t derail proxy season. In the past, a proxy season shutdown would not only exacerbate the backlog that the staff would need to address upon their return, but everyone would be waiting for no-action letters and wringing their hands over how to proceed.
– We have a handful of helpful post-shutdown insights into how things will work when the government eventually reopens, which clients will surely be asking about and will help you with your game plan.
Every shutdown is unique, so we can’t be certain that everything will be handled the same way as it was last fall. But at least we know the general playbook and what to watch for. Stay tuned.
As I wrote on Monday, the Corp Fin Staff issued a CDI last week that prohibits voluntary exempt solicitations. But how is that going to be policed? This Gibson Dunn blog points out a possible hook:
The revised interpretation does not directly address how the revised position will be monitored and enforced, but we note that Rule 15 of Regulation S-T provides the SEC with the authority to remove a submission from EDGAR if, among other things, the agency has reason to believe the submission is misleading or unauthorized.
Notably, the new interpretation does not prevent shareholder proponents and others from conducting exempt solicitations through platforms other than EDGAR. However, whether or not filed on EDGAR, exempt solicitations remain subject to the anti-fraud provision of Rule 14a-9, which makes it unlawful for any soliciting materials to contain false or misleading statements or omissions of a material fact, and the conditions set forth in Rule 14a-2(b)(1)(vi), under which the exemption from having to file a proxy statement is not available to “[a]ny person who, because of a substantial interest in the subject matter of the solicitation, is likely to receive a benefit from a successful solicitation that would not be shared pro rata by all other holders of the same class of securities.”
At this point, I think it’s a little murky what will happen if anyone tests the boundaries of the CDI. A stern finger-wagging, or something more? Even if the Staff would plan to pull down filings, there may not be anyone around to do that if the government shuts down. What we do know is that anti-fraud liability continues to apply. And in practice, companies should monitor their own EDGAR pages and alert the Staff if they see a problematic filing – providing a copy of the notice and information showing that the shareholder doesn’t own more than $5 million of stock of the company.
At least the CDI has finally given ESG and anti-ESG proponents something to agree on, with Jim McRitchie and the National Legal and Policy Center both publishing similar grievances yesterday. The NLPC screed is, to put it politely, “interesting.” I’ll note Jim Moloney wasn’t looking very wolf-like when I saw him this week. Yes, I deliberately linked to the Gibson Dunn blog to tie this all together.
Yesterday morning, I wrote that it’s time to start paying attention to tokenization. Yesterday afternoon, the Staff of the Divisions of Corporation Finance, Investment Management, and Trading and Markets published a statement on that very topic, which outlines the different ways that securities can be tokenized and which securities laws apply to each situation. Parts of the statement look remarkably similar to my notes from SRI! Here’s an excerpt:
Tokenized securities generally fall into two categories: (1) securities tokenized by or on behalf of the issuers of such securities; and (2) securities tokenized by third parties unaffiliated with the issuers of such securities. This statement is intended to assist market participants as they seek to comply with the federal securities laws and prepare to submit any necessary registrations, proposals, or requests for appropriate action to the Commission or its staff. We stand ready to engage regarding any questions.
This section describes the distributed ledger concept that I was referring to in yesterday’s blog:
A single class of securities could be issued in multiple formats, including tokenized format. Similarly, an issuer may permit security holders to hold a security in different formats and convert the security from one format to another. The format in which a security is issued or the methods by which holders are recorded (e.g., onchain vs. offchain) does not affect application of the federal securities laws. For example, regardless of its format, the Securities Act requires that every offer and sale of a security must be registered with the Commission unless an exemption from registration is available. Similarly, stock is an “equity security” under the Securities Act and the Exchange Act regardless of its format.
On the other hand, the tokenized security could be of a different class of securities from those issued in traditional format. For example, an issuer could issue one class of common stock in traditional format and issue a separate class of common stock as a tokenized security. However, if the tokenized security is of substantially similar character as the security issued in traditional format and holders of the tokenized security enjoy substantially similar rights and privileges, the tokenized security may be considered of the same class as the security issued in traditional format for certain purposes under the federal securities laws.
In addition to underscoring coming attractions, I appreciate the effort of three divisions working together to issue a joint statement, which helps with seeing the big picture. And speaking of cooperation, SEC Chair Paul Atkins and CFTC Chair Michael Selig are holding a joint event at 2pm ET today to:
[D]iscuss harmonization between the two agencies and their efforts to deliver on President Trump’s promise to make the United States the crypto capital of the world.
The event will be open to the public and webcast live on the SEC’s website.
If there’s a common theme I’m hearing out here at the Northwestern Pritzker School of Law Securities Regulation Institute, it’s to “think big” about modernizing the public company experience. That includes the infrastructure for trading and voting. If you’ve been ignoring the digital revolution, now’s a good time to start paying attention.
There’s strong sentiment that blockchain will completely change the game – for example, we could see instantaneous trade settlement and peer-to-peer trading. It could also resolve longstanding “proxy plumbing” issues that make it hard to know who owns and votes stock – and make it much easier for retail investors to vote.
As one sign that things are moving along, the SEC posted notice yesterday for a revised version of a proposal that Nasdaq initially submitted back in September. Here’s an excerpt:
The Exchange proposes to amend the Exchange’s rules to enable the trading of securities on the Exchange in tokenized form during the pendency of a pilot program to be operated by the Depository Trust Company (“DTC”) pursuant to the terms of a December 11, 2025 Commission No-Action Letter. Specifically, proposed rules Equity 1, Section 1 and Equity 4, Rules 4756, 4757, and 4758 will clarify how Nasdaq trades tokenized securities under this pilot program. This Amendment No. 2 supersedes the original filing, as amended by Amendment No. 1, in its entirety.
And:
The purpose of the proposed rule change is to establish clearly that Nasdaq’s member firms and investors that are eligible to participate in the DTC tokenization pilot program (“DTC Eligible Participants”) may trade tokenized versions of those equity securities and exchange traded products (“ETPs”) on the Exchange that are eligible for tokenization as part of the DTC tokenization pilot program (“DTC Eligible Securities”), pursuant to the terms of the No Action Letter. The filing describes and applies to one method by which DTC Eligible Securities can trade on Nasdaq within the current national market system, using DTC to clear and settle trades in token form, per order handing instructions that DTC Eligible Participants may select upon entering their orders for DTC Eligible Securities on Nasdaq.
Meredith recently blogged about how the DTC pilot works. And it’s not just Nasdaq and DTC that are investing in tokenization – several other recent developments suggest it’s a priority for a number of big market players, and that companies are starting to jump in too:
At this point, tokenization isn’t just “for the kids” – securities lawyers will need to understand it too. Whether that’s the death knell for it being edgy and cool, I can’t say – but blogging about “the blockchain”* does make me feel a lot like Colin Jost learning Gen Z slang. No cap.
– Liz Dunshee
*It’s just “blockchain” now. “The blockchain” is very 2019.
