Cooling-Off Period
Once the registration statement is filed with the SEC, the SEC will take a minimum of 20 days to review it. This period is called the cooling-off period (also called the registration period) because the company will not be able to sell shares to the public, and only certain kinds of limited offers will be allowed.
During this time, the SEC will not try to determine whether the security is a good investment. Rather, it will make sure everything that is supposed to be in the registration statement is actually in it. If the SEC finds no material omissions or misleading statements, the registration statement will become effective after 20 calendar days.
If the SEC does find issues with the prospectus, it will return a qualified decision, and the issuer will have to file an amendment to the registration statement. Once an amendment has been filed, the company must wait an additional 20 days for SEC review.
During the cooling-off period, both the issuer and the lead underwriter will try to solicit investor interest in the new issue. This often involves a road