January 24, 2019

First IPO Without Delaying Amendment?

It’s hard to imagine the government shutdown continuing for another 19 days – but this amended Form S-1 filed yesterday by Gossamer Bio does just that. Just like Corp Fin’s shutdown FAQ #5 instructs, the cover page sets the proposed offering price and says:

This registration statement shall hereafter become effective in accordance with the provisions of Section 8(a) of the Securities Act of 1933.

For those playing along at home, that means the effective date is scheduled for February 12th. The registration statement also includes this risk factor:

As a result of the shutdown of the federal government, we have determined to rely on Section 8(a) of the Securities Act to cause the registration statement of which this prospectus forms a part to become effective automatically. Our reliance on Section 8(a) could result in a number of adverse consequences, including the potential for a need for us to file a post-effective amendment and distribute an updated prospectus to investors, or a stop order issued preventing use of the registration statement, and a corresponding substantial stock price decline, litigation, reputational harm or other negative results.

The registration statement of which this prospectus forms a part is expected to become automatically effective by operation of Section 8(a) of the Securities Act on the 20th calendar day after the most recent amendment of the registration statement filed with the SEC, in lieu of the SEC declaring the registration statement effective following the completion of its review. Although our reliance on Section 8(a) does not relieve us and other parties from the responsibility for the adequacy and accuracy of the disclosure set forth in the registration statement and for ensuring that the registration statement complies with applicable requirements, use of Section 8(a) poses a risk that, after the date of this prospectus, we may be required to file a post-effective amendment to the registration statement and distribute an updated prospectus to investors, or otherwise abandon this offering, if changes to the information in this prospectus are required, or if a stop order under Section 8(d) of the Securities Act prevents continued use of the registration statement. These or similar events could cause the trading price of our common stock to decline substantially, result in securities class action or other litigation, and subject us to significant monetary damages, reputational harm and other negative results.

I blogged yesterday that Nasdaq wasn’t eager to allow listings for companies whose registration statements haven’t gone through full SEC review, and that was a barrier to going public right now even though the SEC is allowing companies to file registration statements without the delaying amendment. And while I continue to think that “eager” would be an overstatement, the WSJ later reported that the exchange is warming up to the workaround – especially for the handful of companies that have worked through pre-shutdown SEC comments. So, Gossamer and the other trailblazers are (cautiously) moving forward. No doubt they’re also considering how to pivot if the SEC returns to its full strength within the next couple weeks.

BlackRock’s Annual Letter: Linking Purpose & Profits

Last week, two of the world’s largest asset managers gave their annual “heads up” to companies about this year’s engagement priorities. This NYT write-up describes how BlackRock CEO Larry Fink exhorts CEOs to be “leaders in a divided world” – while Bloomberg’s Matt Levine wonders if Larry Fink is now the late-capitalist version of “president of the world.” But a takeaway for us governance people is that the leadership suggestions have a human capital tone – helping workers prepare for jobs of the future, as well as retirement.

The letter also refines last year’s directive to pursue the greater good by emphasizing the compatibility and co-dependence of purpose & profits. When it comes to preparing for this year’s engagements, here’s what BlackRock’s new annual letter identifies as priorities (also see this Cooley blog and this Weil blog):

BlackRock’s Investment Stewardship engagement priorities for 2019 are: governance, including your company’s approach to board diversity; corporate strategy and capital allocation; compensation that promotes long-termism; environmental risks and opportunities; and human capital management. These priorities reflect our commitment to engaging around issues that influence a company’s prospects not over the next quarter, but over the long horizons that our clients are planning for.

In these engagements, we do not focus on your day-to-day operations, but instead seek to understand your strategy for achieving long-term growth. … [W]e seek to understand how a company’s purpose informs its strategy and culture to underpin sustainable financial performance. Details on our approach to engaging on these issues can be found at

State Street’s Letter: “Culture Eats Strategy for Breakfast”

Not inconsistent with BlackRock’s asks, last week on our “Proxy Season Blog” I wrote that pension funds want to know about your culture. According to their annual letter, that topic is also pretty important to State Street. SSGA has created a framework to help boards align culture & strategy (see page 6) – and they’ll be asking these questions during engagements:

– Can the director(s) articulate the current corporate culture?

– What does the board value about the current culture? What does it see as strengths? How can the corporate culture improve?

– How is senior management influencing or effecting change in the corporate culture?

– How is the board monitoring the progress?

Liz Dunshee