Proving that where there’s a will, there’s a way, the U.S. capital markets continue to push forward as the political stalemate at the heart of the federal government shutdown continues. A temporary solution to the shutdown appears to be at hand but in the spirit of “then what?” we want to keep you up to date. Acknowledging the obstacles created by its inability to review registration statements and declare them effective during the course of the shutdown, the SEC noted that it would not object to issuers omitting or deleting the traditional delaying amendment language from their registration statements so that they will become effective in accordance with Section 8(a) of the Securities Act. While a number of already-listed issuers have done just that, questions remained as to whether the major stock exchanges would permit the listing of a company conducting its initial public offering in that way. We got our answer on January 24 when Nasdaq issued FAQs on the subject.
According to the FAQs, Nasdaq will generally agree to list a company that otherwise meets its listing standards and cleared all SEC comments to its IPO registration statement prior to the beginning of the shutdown. Conversely, Nasdaq will generally not agree to list a company that hasn’t yet engaged in the SEC comment process. Nasdaq stated that in “limited situations,” it would consider listing a company that meets its listing standards and has substantially completed the comment process with the SEC, but still has some outstanding comments remaining. In that case, Nasdaq will consider the nature of the outstanding comments and whether the company has addressed all of the SEC’s concerns raised by those comments; in addition, Nasdaq may ask the company’s auditors and counsel to make representations regarding the company’s responses to the comments.
Proceeding in this manner will raise a number of challenges for companies and bankers, not the least of which is the fact that the final offering price must be included in the prospectus (as opposed to the customary price range) and will therefore be fixed 20 days before confirmations of sales can begin.