As anyone trying to get an IPO done right now knows, despite the welcome updated Rule 430A guidance from the SEC Staff, there are still lots of unusual complications to consider or work through while the government is shut down. For more FAQs on some of these issues, here’s a Davis Polk alert on public offerings during the shutdown with a suggestion for a way to upsize if you opt not to use Rule 462(b).

Can we upsize the offering after effectiveness like in a regular-way IPO?

Yes, but with a change to the usual mechanics.

The SEC guidance did not address whether a company can register additional shares post-effectiveness with Rule 462(b) (the rule ordinarily used, which refers to a registration statement being “declared effective”), and we believe there are risks to relying on that rule during the shutdown.

That said, a workaround can get the company to the same place, as long as the company is OK paying an additional registration fee that it might not use. The company could register 20% more shares (and pay the correspondingly higher fee), and reflect the registration of the additional shares in the fee table filed with the registration statement. The company should then disclose on the cover page of the prospectus (right after the description of the underwriters’ option to purchase additional shares) the number of additional shares it has registered in case the company decides to increase the size of the offering after effectiveness. Similar disclosure should be included in the offering summary, the underwriting section, and the selling stockholder table when applicable.

It also addresses, “What if something happens during the 20-day period that requires disclosure?”

If something happens during the 20-day period that warrants disclosure in the IPO prospectus, amending the registration statement to include it would restart the 20-day period. Rather than filing an amendment, an eligible company could instead include disclosure of the material development in a free writing prospectus (FWP) filed with the SEC, and then reflect the change in the final prospectus. However, a development can only be handled in an FWP if it does not “conflict with” the information in the registration statement. What that means is a judgment call that will depend on facts and circumstances.

If the company moves forward with this approach, it would need to complete the final prospectus with pricing terms and updated disclosure immediately after pricing so that the prospectus is filed with the SEC and ready for use before any sales are confirmed (so it will be deemed to be part of the registration statement on the date it is first used after effectiveness by operation of Rule 430C). What this means in practice is a significant acceleration of the usual timetable for finalizing the prospectus.

Finally, don’t forget that minor changes may be necessary in the closing deliverables — for example, the legal opinions should state that the registration statement “became” effective rather than “was declared” effective.

It also includes a tip for companies without a pending registration statement. It says that if you expect to file one in the near future, you should do so sooner rather than later to get in the queue. The SEC will be backed up when the government reopens and presumably will review registration statements in the order they were received.

– Meredith Ervine