Post-Effective Period: Prospectus Delivery and Aftermarket Rules
Quick Answer
Once the registration is effective, sales may begin. The post-2005 "access-equals-delivery" reform deems the final prospectus delivered to a purchaser if it has been (or will be) filed with the SEC on EDGAR, satisfying the "preceded or accompanied" prospectus-delivery requirement on the confirmation of sale. A companion notice rule requires each purchaser to receive a notice that the sale was made under a registration statement (or that the purchaser may request the final prospectus). The dealer aftermarket rule sets aftermarket prospectus-delivery periods: 25 days for IPOs of listed / Nasdaq issuers, 90 days for IPOs of non-listed issuers, 40 days for non-reporting follow-ons, and none for reporting-issuer follow-ons. The broker-dealer prospectus-delivery rule imposes the 48-hour rule for IPOs (a copy of the preliminary prospectus must reach each customer expected to receive a confirmation at least 48 hours before the confirmation is sent).
The post-effective period is when the deal sells. The principal's job is to make sure the firm's confirmation, delivery, and aftermarket-trading practices stay inside the access-equals-delivery + purchaser-notice + dealer-aftermarket + broker-dealer-delivery framework.
Access Equals Delivery
Before 2005, the "preceded or accompanied" prospectus-delivery requirement meant a paper prospectus had to physically reach the purchaser by the time of confirmation. The 2005 SEC reforms replaced that with access:
| Element | What Access-Equals-Delivery Provides |
|---|---|
| Trigger | Final prospectus has been filed (or will be filed) with the SEC on EDGAR |
| Effect | The "preceded or accompanied" requirement is satisfied on the confirmation of sale without paper delivery |
| Notice mechanism | A notice of delivery to the customer (typically embedded in the trade confirmation) confirms that the final prospectus is on EDGAR |
| Limits | Access-equals-delivery does not apply to business combination transactions; for those, actual delivery is still required |
The access-equals-delivery reform is what makes modern electronic underwriting work. Prospectuses are filed on EDGAR; investors get a confirmation that says "the prospectus is available on EDGAR"; that confirmation satisfies the delivery requirement. No paper has to move.
Exam Tip: Gotchas
- Access-equals-delivery satisfies the prospectus-delivery duty ONLY at confirmation. Pre-confirmation written offers in the post-effective period must still be statutory prospectuses or free-writing prospectuses. The access-equals-delivery reform does not authorize free-form post-effective written offers; it solves the delivery-at-sale problem.
- Access-equals-delivery does NOT apply to business combinations. A merger that involves a registered exchange of securities still requires actual delivery of the prospectus (typically via the security-holder-approval delivery rule, which deems delivery satisfied when securities are distributed in connection with security-holder approval).
- The access-equals-delivery trigger is FILING the final prospectus on EDGAR. If the final prospectus has not been filed (or not been filed within the required window), access-equals-delivery does not work and the firm is back to actual-delivery mode.
Notice to Purchaser
The purchaser-notice rule is the companion to access-equals-delivery. Even though access equals delivery, each purchaser must receive a notice at or after the confirmation:
| Element | What the Notice Requires |
|---|---|
| Notice content | Notice that the sale was made pursuant to a registration statement (or, if applicable, that the purchaser may request a copy of the final prospectus) |
| Delivery mechanism | Notice may be sent with the confirmation of sale |
| Purpose | Tells the purchaser that the sale was a registered transaction (and where to find the prospectus) |
In practice, the access-equals-delivery notice and the purchaser notice are often combined into one piece of language printed on the trade confirmation.
Exam Tip: Gotchas
- The purchaser notice is a notice obligation, not a delivery obligation. It tells the purchaser that a final prospectus exists and where to get it. It does not require the firm to mail the prospectus.
- The purchaser notice is per purchaser, not per offering. Every buyer in the registered offering must receive the notice. A confirmation that omits the notice language is a purchaser-notice failure even if access-equals-delivery is met.
Dealer Aftermarket Prospectus Delivery
After the offering, dealers in the secondary market still have residual prospectus-delivery duties for a window of time before the dealer exemption from the framework kicks in. The dealer aftermarket rule sets that window:
| Offering Type | Aftermarket Delivery Period |
|---|---|
| IPO of issuer listed on national exchange or quoted on registered electronic interdealer system (e.g., Nasdaq) | 25 days after effective date (or first bona-fide offering date) |
| IPO of issuer NOT listed / quoted (over-the-counter only) | 90 days |
| Reporting-issuer follow-on offering | No aftermarket delivery requirement |
| Non-reporting-issuer follow-on offering | 40 days |
"First bona-fide offering date" is typically the effective date for most registered deals. Even when the calendar period has expired, dealers must deliver upon request.
| Memory Map | Period |
|---|---|
| Listed IPO | 25 days |
| Non-listed IPO | 90 days |
| Non-reporting follow-on | 40 days |
| Reporting follow-on | None |
Exam Tip: Gotchas
- The 25-day period is for LISTED issuer IPOs. "Listed" includes Nasdaq-quoted issuers because Nasdaq is a "registered electronic interdealer system" for these purposes. Issuers traded only on the OTC market fall into the 90-day category.
- Reporting-issuer follow-ons have NO aftermarket delivery period. The market already has the issuer's 10-K and 10-Q disclosure; no special prospectus-delivery period is needed in the secondary market. This is the most-tested distinction.
- "Deliver upon request" applies even after the period expires. Even when the calendar period has run, a dealer must deliver the prospectus to a buyer who specifically requests it. The calendar period governs the automatic-delivery duty, not the on-request duty.
Broker-Dealer Prospectus Delivery Duties
The broker-dealer prospectus-delivery rule is the FINRA / SEC-enforced framework that operationalizes prospectus delivery at the customer level:
The 48-Hour Rule (IPOs Only)
| Element | Requirement |
|---|---|
| Trigger | Initial public offering of a registered security |
| Duty | Broker-dealer must send a copy of the preliminary prospectus to each customer expected to receive a confirmation of sale |
| Timing | At least 48 hours before sending the confirmation |
Reasonable Steps by the Managing Underwriter
The managing underwriter must take reasonable steps to ensure that all participating broker-dealers have sufficient copies of the preliminary and final prospectus to satisfy their delivery duties. The manager controls the print-and-distribute pipeline; this rule makes the manager responsible for the syndicate's delivery capability.
Associated-Person Knowledge
A broker-dealer must make available to all associated persons who solicit customer interest a copy of the preliminary prospectus so they can understand the offering before talking to customers.
Anti-Fraud Status
The broker-dealer prospectus-delivery rule is enforced under the Exchange Act's manipulative-or-deceptive-device prohibition. Violations are anti-fraud violations: the firm is not just out of compliance with a procedural rule but in the stronger anti-fraud category.
Exam Tip: Gotchas
- The 48-hour rule applies ONLY to IPOs. A reporting-issuer follow-on does not require a separate 48-hour preliminary-prospectus delivery. Access-equals-delivery plus the associated-person availability requirement is sufficient.
- The "expected to receive a confirmation" formulation is broader than "actually receives one." A customer who indicates interest is "expected to receive a confirmation" once the syndicate moves to allocation. The 48-hour rule attaches to the expectation, not the final allocation.
- The manager's "reasonable steps" duty is a supervisory failure point. A manager that does not confirm the syndicate has copies is exposed not just to a procedural violation but to an Exchange Act anti-fraud finding.
Securities Distributed in Connection with Security-Holder Approval
The security-holder-approval delivery rule deems a final prospectus to be delivered for prospectus-delivery purposes when securities are distributed in connection with security-holder approval (e.g., merger securities issued in exchange for target shares) and the prospectus has been mailed to the security holders before they approve the transaction.
This is the rule that makes business combinations work: in an M&A registered exchange, the prospectus is mailed with the proxy statement before the security-holder vote. Once the vote happens and securities are exchanged, the rule treats the prospectus as having been delivered.
Exam Tip: Gotchas
- The security-holder-approval delivery rule is the "prospectus before the vote" rule. It is the delivery mechanism for business-combination securities, where access-equals-delivery does NOT apply. The pre-vote mailing of the prospectus is what satisfies the delivery requirement at the post-vote distribution.
Filing of Prospectuses on EDGAR
The prospectus filing rule specifies which versions of a prospectus must be filed with the SEC, in what format, and how soon after first use:
| Filing Path | What It Covers |
|---|---|
| Post-effective pricing supplement | Prospectus filed for an offering already declared effective (most common for IPOs) |
| Shelf-takedown pricing supplement | Prospectus filed for shelf takedowns |
| Material-changes update | Prospectus that reflects material changes from the version at effectiveness |
| Shelf supplement | Prospectus supplements for shelf takedowns |
Filing is the trigger for access-equals-delivery. If the prospectus is not filed on EDGAR, access-equals-delivery does not satisfy the prospectus-delivery duty.
Exam Tip: Gotchas
- Prospectus filing is the LATCH that closes the post-effective sequence. Pricing the deal, declaring effective, filing the prospectus on EDGAR, satisfying access-equals-delivery at confirmation: the chain only works if the prospectus filing happens.
- A shelf takedown uses the shelf-takedown filing path, not the post-effective pricing supplement. The post-effective pricing supplement is the IPO / non-shelf route; the shelf-takedown supplement paths are for shelf offerings.
Stale Prospectus After Nine Months
The stale-prospectus rule forces the issuer to refresh financial information once it ages out:
| Threshold | Requirement |
|---|---|
| Prospectus used MORE than 9 months after effective date | Must contain financial information NOT more than 16 months old |
The rule prevents an issuer from continuing to use a prospectus indefinitely with stale financials. If the prospectus is more than 9 months old and the financials are more than 16 months old, the issuer must file an updated prospectus (typically a material-changes update reflecting the new information).
Exam Tip: Gotchas
- The 9-month / 16-month rule is two thresholds, not one. Nine months from the effective date triggers the test; the test is whether the financials are more than 16 months old. A prospectus that has been on file 11 months but has financials only 14 months old is still acceptable; an 11-month-old prospectus with 18-month-old financials must be refreshed.
- Refreshing is typically done through a material-changes update, not a post-effective amendment. Material changes to a prospectus that is already on file move through the material-changes filing path; only structural changes to the registration statement itself require a post-effective amendment.
The Post-Effective Sequence at a Glance
| Step | What Happens |
|---|---|
| 1. Effectiveness declared | SEC declares the registration statement effective |
| 2. Final prospectus filed | Issuer files the final prospectus on EDGAR |
| 3. 48-hour preliminary delivery (IPOs) | BD sends preliminary prospectus to expected-confirmation customers at least 48 hours before confirmation |
| 4. Confirmation of sale | Confirmation satisfies "preceded or accompanied" via access-equals-delivery |
| 5. Purchaser notice | Notice that the sale was made under a registration statement |
| 6. Aftermarket dealer delivery | 25 / 40 / 90-day window depending on offering type |
| 7. Stale-prospectus refresh | At 9 months post-effective, financials must be 16 months old or less |
The principal supervises the firm's place in this sequence. The firm may be the manager (responsible for syndicate distribution and managing-underwriter reasonable steps), a syndicate member (responsible for its own customer delivery), or an aftermarket dealer (responsible for the dealer aftermarket delivery). Each role has its own checklist.
Exam Tip: Gotchas
- Access-equals-delivery, purchaser notice, dealer aftermarket, and the broker-dealer prospectus-delivery rule are not the same rule. Access-equals-delivery is the deemed-delivery reform; the purchaser notice is the per-buyer informational duty; the dealer aftermarket period is the residual delivery window in the secondary market; the broker-dealer prospectus-delivery rule is the BD-level operational duty (48-hour for IPOs, plus manager reasonable-steps duty). The exam will test the differences directly.
- The 25 / 40 / 90 / 0 split for dealer aftermarket delivery is the most heavily tested item in the post-effective topic. Memorize: 25 listed IPO, 90 non-listed IPO, 40 non-reporting follow-on, 0 reporting follow-on.