Meredith blogged last week about the first operating company to close an IPO during a government shutdown. As Meredith had noted, that company had gone public based on a registration statement that it filed on October 6th – which was before Corp Fin updated its shutdown FAQs to say:

Rule 430A allows for the omission of certain information, including pricing and price-dependent information, from the form of prospectus filed as part of a registration statement that is declared effective. Because the staff is not available to review or accelerate the effectiveness of registration statements during the shutdown, we will not recommend enforcement action to the Commission if a company omits the information specified in Rule 430A from the form of prospectus filed as part of a registration statement during the shutdown and such registration statement goes effective, either during or after the shutdown, by operation of law pursuant to Section 8(a) of the Securities Act.

Late last week, another IPO priced – the first to rely on this updated FAQ, providing a price range in its Form S-1/A that was filed on October 10th and went effective by operation of law 20 days later, under Section 8(a) of the Securities Act. Here’s an excerpt from a Cooley case study about how it played out:

Though a couple of weeks delayed, Navan was still able to price its IPO in October and raise $923.1 million – one of the largest tech IPOs of 2025 – debuting on Nasdaq under the ticker NAVN on October 30, 2025. And importantly, despite the continuing government shutdown, Navan proceeded with a traditional roadshow and pricing.

This IPO confirms that some companies and their deal teams may be able to use Corp Fin’s updated FAQ to get across the finish line during the government shutdown – at least a couple more IPOs have priced this week, which is great news! But it also sounds like it’s a carefully orchestrated process and the stars have to align in the right way.

– Liz Dunshee

Earlier this week, the U.S. Travel Association sent a letter to Congressional leaders calling for an end to the government shutdown, which at 37 days is now the longest shutdown in history – surpassing the 35-day shutdown in 2018-2019. Over 500 companies signed the letter, which of course warns of disruption to the travel industry. Sure enough, as reported by Reuters and other outlets, the FAA is now planning to order a 10% cut in flights. With federal workers going unpaid and the general public experiencing the impact, we have to wonder, “When will it end??”

On the securities front, even though we’re very happy to see recent IPO activity defying the “shutdown odds” – that’s likely to get more difficult if the Staff isn’t able to get back to work in the near future.

That’s because Staff plays a key role in the IPO process by reviewing registration statements. Even if folks don’t agree with every comment or want the Staff to be speedier, in the big picture, everyone involved in registered offerings tends to appreciate and rely on the Staff’s review – making it unlikely companies and banks will be eager to go through with IPOs using registration statements that hadn’t gotten very far in the review process.

I hope the Staff returns soon, and I have a feeling they’ll be focused on efficiency when they do.

If the shutdown continues, the Staff’s absence may also end up affecting SEC Chair Paul Atkins’ ambitious rulemaking aspirations. We know from the Spring 2025 Reg Flex Agenda (published in September) that Chair Atkins wants to create a framework for crypto assets, modernize disclosures, make it easier to go and be a public company, reform the shareholder proposal process, and more. That’s a lot!

While rulemaking typically isn’t considered an “essential” function that continues during a government shutdown, this Bloomberg article recaps the creative ways that Chair Atkins has been paving the way for these priorities, even with the Staff on furlough. Here’s an excerpt:

The Securities and Exchange Commission under the Trump appointee in July urged a federal court to toss Biden-era climate reporting requirements, in part to avoid the lengthy rulemaking that would be needed to undo them. The SEC in September then advised companies they can funnel investors’ fraud claims into mandatory arbitration, without new rules. Atkins also suggested in a speech this month that companies could block votes on shareholders’ environmental and social proposals now, using existing Delaware law.

That’s in addition to updated 13D/G guidance, a new Staff Legal Bulletin on Rule 14a-8 no-action requests, the updated Corp Fin shutdown FAQs, high-profile interviews, and probably more things that I’m forgetting!

Companies have welcomed these updates – and many of them have been issued in formats that we’ve grown used to through the years, like CDIs and SLBs. But the article points out that while these paths can get the job done in the short-term, a new administration would be more likely to unwind things that didn’t go through the standard notice & comment period. That swinging pendulum is another thing we’re reluctantly growing accustomed to!

– Liz Dunshee

This correlation isn’t too surprising, but it’s stronger than I might have guessed:

From 2005 to 2024, Big R financial restatements occurred at a rate of around 3% per year. On average, just under 30% of these restatements followed an auditor change in the previous year. As a point of reference, the average annual auditor-change rate across the broader population, which includes companies without Big R restatements, was 11%.

Those stats are from a recent report from the PCAOB – which also shows that the rate of auditor change was nearly 13% in 2024. That compares to an average of 11% across the 20-year period and is just a hair under the years with the greatest rate of turnover (2005 and 2009).

Here’s more color from Dan Goelzer:

The fact that restatements are more likely in the first year of a new auditor’s tenure is not surprising. A new audit firm takes a fresh look at the company’s financial reporting and brings no assumptions or biases from prior audits. Similarly, the new auditor has no incentive to overlook or perpetuate past mistakes or debatable judgment calls. A new auditor may also perform more rigorous procedures as part of building its knowledge of the client.

While restatements can have negative consequences for the company, from an audit committee perspective the fresh look that a new auditor provides may improve long‑term reporting integrity.

Just because something is expected and is good in the long run, doesn’t mean it’s easy in the moment. Clawback and disclosure triggers give you all the more reason to approach an auditor change with care and lots of pre-planning, to the extent possible. We’ve also blogged about a prior study that found that within the universe of restatements occurring after an auditor change, they are more common when the auditor turnover happens during the second half of the fiscal year.

– Liz Dunshee

Last week, I attended the Berkeley Fall Forum on Corporate Governance – where I heard lots of candid perspectives on today’s boardroom challenges. The sessions covered everything from AI oversight to the shifting regulatory and geopolitical landscape, to new paradigms for shareholder democracy, to the latest venture capital drivers – and more. Here are a few topics that are sticking with me:

– CEOs on Soapboxes

– Celebrity CEOs can be strategic – people are drawn to authenticity.

– In some ways having a CEO without a filter can also protect from going viral in a bad way – when everyone knows it’s their personality, it takes away the element of seeing someone “misbehave.”

– Don’t over-lawyer or over-polish.

– “The press release is disappearing. A LinkedIn letter to employees says more.”

– Governance in the Age of Permacrisis

– Boards and execs must define their lane and align with mission. You can’t speak out on everything, and you also need to remember that the loudest voices aren’t always the most representative.

– Additionally, the “majority” view isn’t necessarily where the trendline is moving.

– Everyone needs to pause and reflect before reacting, think of the mission, and recognize influential emerging views. “You need someone in the room who can say no.”

– VC Landscape: Quality Over Quantity

– Seed-stage “graduation rates” are rising, but VCs want quality investments.

– The Rule of 40 still rules. Companies need big growth, current profitability, or a clear path to profitability within 6–12 months.

– VCs are wanting board observer seats to avoid the risk of fiduciary duties while still having the right to be in the room. This can create difficult situations for founders – in-house counsel can help by helping to build the muscle around going into a closed session to protect privilege or sensitive information.

– Companies/founders need to understand the liquidation stack and know “you don’t get something for nothing.”

– 2026 Incorporation Advice

– The debate around Delaware vs. Nevada is heating up – but the percentage of Nevada-based companies is still small compared to Delaware. The consensus right now is still that Delaware is unmatched in its deep bench of case law and responsive judiciary.

– For dual-class, founder-led companies, Nevada may offer more certainty that the board will get the benefit of the business judgment rule for future transactions, and shareholders have already indicated trust in the founder by way of investing in a dual-class company.

– Currently, there are no state discounts on D&O insurance based on where you incorporate, so this shouldn’t be the driving force of your decision. Carriers are monitoring securities litigation trends – and mandatory arbitration provisions may also factor in.

– AI Strategy & Board Oversight

– Boards are asking: How can AI make or save us money (or both)?

– The challenge is balancing speed with responsible governance. Reverse mentoring, interdisciplinary management-level committees, and director data fluency + quarterly updates are emerging best practices.

– Most boards are not creating a standalone technology committee at this time – the impact of AI affects topics already covered by each of the existing committees.

– On the impact of AI on today’s workforce, panelists discussed the importance of thinking strategically to reskill and upskill in a way that helps retain workers – and positive corporate culture.

– Shareholder Democracy & Fragmentation

– Voting choice expansion and stewardship disaggregation are reshaping engagement.

– Have certain firms been too influential? Will Rule 14a-8 shareholder proposals go away? “Be careful what you wish for…”

• “Fragmentation is here.”

• “Votes against directors may become the outlet for shareholder sentiment.”

– The goal of voting choice and similar programs is to improve corporate governance over time, by bringing different voices into the system. Individual investors with an economic interest may have different perspectives on what they want from their investments.

– Asset managers are publishing data about the participation levels in voting choice – and policy selections – to help companies forecast voting outcomes in this new fragmented world.

– “It’s more important than ever to understand what investor base looks like.”

– Government Affairs in a Deregulation Era

– It’s not deregulation – it’s re-regulation. But if it re-regulates in an unpredictable, “playing favorites” way, the cost of capital will increase.

– Companies are hiring policy advisors earlier, navigating federal funding, state action, and shifting political winds.

– To be able to make strategic decisions, try to see through the day-to-day swings to understand the big-picture goals.

– Liz Dunshee

Today at 10 a.m. Eastern, the Delaware Supreme Court will hear arguments in Rutledge v. Clearway Energy – which will discuss the constitutionality of the controversial off-cycle amendments to the Delaware General Corporation Law that the state legislature adopted back in March.

The changes were part of “SB 21” – which amended DGCL Section 144 to provide a safe harbor for transactions in which directors, officers, and/or controlling stockholders might have an interest. SB 21 was the Delaware legislature’s response to the court decision that fueled “DExit” grumbles.

The question of constitutionality is a big deal not just for the part of the amendments dealing with conflicted transactions, but also the changes to the scope of books & records demands. Everyone has been in “wait & see mode” to know for sure that companies can actually rely on these amendments. This Bloomberg article has more detail:

A Clearway Energy Inc. shareholder argues S.B. 21 violates Delaware’s constitution by limiting the Chancery Court’s ability to provide remedies for breaches of fiduciary duty. It also violates protections against retroactive laws affecting vested rights with provisions that apply to transactions that occurred before the law took effect, he said.

The company and Meyer say the legislation maintains authority lawmakers hold to define corporate duties and standards of review—and if necessary apply changes retroactively. S.B. 21 establishes a framework for reviewing fiduciary duty claims involving interested transactions without stripping the Chancery Court’s jurisdiction, they said.

The article includes a prediction that the law will be upheld and that Delaware will continue to be the “First State” when it comes to incorporations. We will stay tuned!

You can watch a live stream of the oral arguments on the Delaware Supreme Court’s website – and briefs from the parties and others are available on this page. If you’re a member of this site, you can find more resources in our “Delaware” Practice Area – where we continue to post updates on the DGCL amendments and related matters.

– Liz Dunshee

There is clearly a lot happening in corporate governance these days! In this 27-minute episode of Women Governance Trailblazers, Courtney and I caught up with Maeve O’Connor, who is Co-Chair of the Debevoise’s Securities Litigation Practice and Chair of the firm’s Insurance Litigation Practice. We discussed:

1. Highlights of being a securities litigator.

2. Enforcement trends and recommendations for boards and companies in a deregulatory environment.

3. Securities litigation trends that boards may need to consider.

4. Things boards and advisors can do to improve disclosures and minutes from a litigation perspective.

5. Changes and trends resulting from recent amendments to the Delaware General Corporation Law and the “DExit” movement.

6. Maeve’s advice to early-career lawyers who aspire to be part of the next generation of corporate 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.

– Liz Dunshee

I’m still coming down from the magical experience of our “Proxy Disclosure & 22nd Annual Executive Compensation Conferences” – which happened a couple of weeks ago in Las Vegas. When I say “magical,” I mean that literally – we had a pretty impressive magician, as well as caricature artists, at our welcome reception.

Of course, all the learnings and connections were magical too. Here are 8 takeaways from the Proxy Disclosure Conference, to help everyone gear up for what’s going to be a wild proxy season:

1. The SEC is “open for business”

– Even though the Commission is facing staffing reductions and operational challenges due to the government shutdown, leadership wants to show that they are really open for business.

– Actions so far show an effort to be flexible while also continuing to provide investor protection. Corp Fin continues to have strong leadership and is actively engaging with issuers.

– The disclosure review program still exists – anecdotally, companies are receiving typical comments on MD&A and non-GAAP disclosures – there’s less emphasis on specialized comment initiatives that we’ve seen in the past.

2. Government shutdown impact

– Most Corp Fin activities are limited during the shutdown.

– EDGAR remains open.

– Companies should consider disclosures about shutdown impacts in risk factors, MD&A, and forward-looking statements, especially if they’re dependent on government activities.

3. Artificial intelligence oversight and use

– Not surprisingly, we talked about AI becoming a key focus for boards.

– Companies are enhancing disclosure about AI oversight, risk assessment and governance.

– Companies are using AI in business and reporting functions, such as MD&A analysis of business trends – with controls over AI-generated outputs.

– Institutional investors are using AI tools to analyze governance and compensation data.

4. Geopolitical disclosures

– Think about risks and business impacts of changing regulations, trade matters, etc. – for risk factors as well as your MD&A.

– After pulling back on earnings guidance earlier this year, some companies are now providing guidance again, but it may not be as specific as it was in the past – it’s more “directional” in nature.

5. Delaware updates to watch

– A lot of investors and companies still like Delaware, but Nevada may be worth discussing for companies that have concentrated ownership.

– Stay tuned for the impact of recent statutory amendments.

6. Activism looks different these days

– More settlements, higher-caliber director slates, increasingly targeting large-cap companies, and more “vote no” campaigns.

– Activists are increasingly using social media, AI, and data analytics to mobilize shareholder votes and shape narratives.

– Companies may have to deal with multiple activists with conflicting agendas – and while proxy fights are costly and exhausting, companies should also keep in mind that settling too early may cause additional activists to emerge.

– Year-round activism requires constant preparedness and monitoring.

7. The “shareholder proposal” landscape is facing major changes

– We may see bylaw amendments to curb precatory shareholder proposals, or statutory fixes as Texas is trying to do.

– We don’t know yet whether these bylaws will be challenged in court or the extent to which having this bylaw will negatively impact director support at annual meetings. Now is the time to talk about this with your institutional investors to figure that out!

– We may see companies seek no-action relief under the theory that precatory proposals are not a right under state law – with the SEC framing up a question for Delaware (or other states’) courts to decide.

– The biggest question is whether the Rule 14a-8(i)(1) basis for exclusion will apply only to E&S proposals, or also governance proposals.

– The jury is out on which companies will serve as a “test case” for excluding precatory proposals on the basis of state law, and how comfortable other companies will be in relying on that situation-specific relief.

8. Improve your proxy process

– Changes to voting mechanics with retail shareholders and asset managers make it even more important to understand your shareholder composition and tailor outreach strategies.

– Detailed time and responsibility matrices are key to an effective proxy process – the new thing here is that you can increasingly leverage technology to keep track of tasks. Tech is also in play with using social media for outreach and streamlining virtual meetings.

If you registered for the Conferences, the video archives are now available – and transcripts are coming soon! If you’re a member of our sites who registered for the Conferences, you can access the archives with your regular login credentials. If you registered and aren’t a member, reach out to info@ccrcorp.com to get access.

I want to give a huge shoutout to everyone who attended the Conferences – as well as our excellent speakers and our hardworking CCRcorp team, who all put so much effort into making it a success! I can’t wait to see everyone next year in Orlando!

– Liz Dunshee

According to this Reuters article, when it comes to the “Department of Government Efficiency” initiative at the SEC, “Elvis has left the building.” DOGE arrived at the agency in late March, and since then we’ve seen a big reduction in the number of staff at the Commission.

As we discussed at our Proxy Disclosure Conference, it’s too early to tell whether the staffing cuts will affect regulatory initiatives, enforcement, disclosure review, or responses to registration statements. The Reuters article echoes that sentiment – here’s an excerpt:

Critics said DOGE’s work at the SEC marked a new level of White House involvement at an agency conceived by Congress to operate independently of the executive.

It was unclear how much of DOGE’s efforts would have a lasting imprint on the SEC. As part of the DOGE initiative, the agency offered several rounds of buyouts, resulting in deep cuts to the workforce at a time of market turbulence and dealmaking by the president.

DOGE also planned a restructuring of the agency’s IT functions and sought to influence regulations on blank-check companies and confidential reporting by private investment funds.

– Liz Dunshee

I blogged earlier this year that the SEC is getting stricter about whistleblower awards. The folks at “Whistleblower Network News” have now tallied the dollar amounts from the orders posted by the SEC – this article discusses what they found:

Aside from 122 denials and six orders omitting award amounts, award orders for fiscal year (FY) 2025 total $59.7 million. This figure averages to around $2 million per award.

The 2025 report stands in stark contrast to (FY) 2024 and (FY) 2023, which had totals of $255 million and $600 million, respectively. The SEC’s whistleblower program has not seen such a low level of awards since 2017 under the Obama administration.

Of course, the SEC hasn’t been able to post orders recently in light of the government shutdown. But the Operations Plan says they’re still accepting tips:

The Division of Enforcement will have only a limited number of staff on duty to perform excepted functions. However, staff will attempt to respond to certain critical matters, including allegations of ongoing fraud and misconduct. The Tips, Complaints, and Referrals website will continue to be operational, and submissions will be reviewed for appropriate action.

So, even though the focus and magnitude of awards might be changing right now, the program is still in effect.

– Liz Dunshee

In late October, Glass Lewis announced the results from its annual policy survey. You might be wondering, “does this still matter, since Glass Lewis is moving away from its house policy?” The answer is “yes,” for a few reasons:

1. That move isn’t happening until 2027.

2. Even after the “house policy” disappears, Glass Lewis is still going to provide research and perspectives to clients – it’s just that everything will be more customized, which is already happening at a certain level. Glass Lewis says results from the policy survey inform its case-by-case analysis of company circumstances in the research and filters that it provides to its global client base.

3. The policy gives insight into investors’ current views on several hot topics – including reincorporation, board and workforce diversity, bylaws restricting shareholder proposals and derivative suits, disclosure of executives’ personal security costs and other executive compensation info, response to “anti-ESG” sentiment, and more.

Here are a few key takeaways:

– 85 percent of investors and 76 percent of non-investors say they do not base governance votes solely on financial performance.

– With Texas and Nevada amending their laws to attract more companies, 50 percent of investors are focusing more on shareholder rights when assessing reincorporation.

– 44 percent of U.S. investors view the CEO-to-median-employee pay ratio as “not important”, compared to just 8 percent of non-U.S. investors.

– U.S. based investors are far more likely to ignore diversity factors in their evaluation of boards (42%) compared to investors from other regions (6%).

When it comes to providing research & recommendations that take into account non-financial factors, that’s a pretty important question (and response) for the proxy advisors. John blogged recently that Texas AG Ken Paxton announced an investigation of ISS & Glass Lewis – another shot across the bow after a court temporarily blocked SB 2337 while challenges to that bill proceed to trial early next year.

On that note, here’s more color on how investors and non-investors are evaluating reincorporation, based on survey responses:

Over the past year, many U.S. states have amended their corporate laws to attract or retain companies. Changes include establishing specialized business courts, providing increased protection for directors, officers, and controlling shareholders, reducing litigation risk, and providing greater clarity on the standards for director independence and/or disinterestedness.

In response to this shifting landscape, half of investors reported that they are putting more emphasis on shareholder rights and protections (compared to just one-third of non-investors. Conversely, compared to investors, non-investors were over twice as likely to have become more favorable to company-friendly laws and statutes, litigation risk, and protecting directors, officers and controlling shareholders.

Glass Lewis typically publishes its policy updates in November or December. Stay tuned!

– Liz Dunshee