As the federal government shutdown drags on into its third week – and with the new flexibility afforded by the SEC Staff’s revised interpretation of Rule 430A as covered by Meredith on Friday – issuers and their advisors are carefully considering whether to remove the delaying amendment from their registration statements and go effective without any Staff interaction. During the 2018-2019 government shutdown, we noted that numerous companies had removed their delaying amendments, however many added the delaying amendment back on the registration statement when the SEC reopened.

When weighing the pros and cons of removing a delaying amendment, it is important to determine when the registration will become effective for the purposes of, e.g., launching an IPO. Securities Act Section 8(a) merely states “[e]xcept as hereinafter provided, the effective date of a registration statement shall be the twentieth day after the filing thereof,” but as we all know, counting days as a securities lawyer always involves some complication. That is why it is good to know that SEC Rule 459 exists, which explains how the 20 days in Section 8(a) is to be counted:

Saturdays, Sundays and holidays shall be counted in computing the effective date of registration statements under section 8(a) of the act. In the case of statements which become effective on the twentieth day after filing, the twentieth day shall be deemed to begin at the expiration of nineteen periods of 24 hours each from 5:30 p.m. eastern standard time or eastern daylight-saving time, whichever is in effect at the principal office of the Commission on the date of filing.

As one of these new Latham FAQs notes:

3. When does my registration statement go effective under Section 8(a)?

At exactly 5:30 p.m. on the 20th day (i.e., 19 days after filing), with each new day starting at 5:30 p.m. See Rule 459. To take an example, if you were to file before 5:30 pm on October 10, your registration statement would be effective at 5:30 pm on October 29.

Rule 459 is definitely one of those SEC rules that goes unnoticed for long periods of time until it becomes very important to one’s practice once the unthinkable actually happens – in this case, the Staff in the Division of Corporation Finance is not around to declare IPO and other registration statements effective on a timely basis.

– Dave Lynn