Effective Date Definition - Investopedia

Effective dates are the times when parties to a contract begin their obligations to perform under the contract. · An effective date can be a date in the past ( ... Business BusinessEssentials BusinessEssentials GuidetoMergersandAcquisitions WhatIsEffectiveDate? Incontractlaw,theeffectivedateisthedatethatanagreementortransactionbetweenoramongsignatoriesbecomesbinding.Foraninitialpublicoffering(IPO),itisthedatewhensharescanfirstbetradedonanexchange. Bothpartiestoacontractusuallyneedtoagreeonaneffectivedatebeforeacontractissigned. UnderstandingEffectiveDates Businessagreementsandtransactionsaredocumentedwitheffectivedates,whicharethetimeswhenpartiestothecontractbegintheirobligationstoperformunderthecontract.Thesecontractscanbeintheformofemploymentagreements,creditorloanagreements,orcommercialtransactiondeals.Asfarastheeffective"date"isconcerned,thepartieswilldecidewhetherthecontractshouldofficiallybeginonthedateofsigning,onadatethathasalreadypassed(backdating),oronafuturedate. Foracompanythatwantstogopublic,theeffectivedateoccurswithin30daysafterthesecurityisregisteredwiththeSecuritiesandExchangeCommission(SEC),givingtimefortheSECtoreviewtheFormS-1registrationforcompletenessofdisclosuresothatprospectiveinvestorscanmakeinformeddecisions.Duringthisreviewperiod,theSECcanaskquestions,requestclarificationsorinstructthecompanytofilloramendcertainsectionsofthefiling. KeyTakeaways Effectivedatesarethetimeswhenpartiestoacontractbegintheirobligationstoperformunderthecontract.Aneffectivedatecanbeadateinthepast(backdating)orinthefuture. ExamplesofEffectiveDates TheIPOprocessistightlycontrolledbytheSEC.TwilioInc.filedforanIPOonMay26,2016.Shortlyafter,thecompanysubmittedanamendedfiling,takingcaretoprintonthecoverpageoftheprospectusthefollowing: TheRegistrantherebyamendsthisregistrationstatementonsuchdateordatesasmaybenecessarytodelayitseffectivedateuntiltheRegistrantshallfileafurtheramendmentwhichspecificallystatesthatthisregistrationstatementshallthereafterbecomeeffectiveinaccordancewithSection8(a)oftheSecuritiesActof1933oruntiltheregistrationstatementshallbecomeeffectiveonsuchdateastheSecuritiesandExchangeCommission,actingpursuanttosaidSection8(a),maydetermine. TheeffectivedateturnedouttobeJune23,2016.Twilio'ssharesbegantradingthatday. Onwebsites,effectivedatesareoftenfoundinthetermsandconditionsandprivacypolicies.Unlessacompanymakesaspecialefforttocreateanindividualagreementwithaveryspecializedend-userorgroupofend-users,termsandconditions(ortermsofuse)andaprivacypolicywillapplytoallusersofagivenwebsiteorinternetplatform. Usersareusuallyrequiredto accepttheterms andconditionswhentheydownloadanassociatedapporlogontoawebsite.Thosetermsshouldnotbedifferentfromtermsgiventoandreadbyanyotheruseatanyothertimeunlessthosetermsareupdatedandallusersareaskedtoapprovetherevisedterms. Insuchsituations,theeffectivedatefortermsandconditionsandprivacypolicyagreementsisnotwhentheuseragreestoit,but whenthetermswerelastupdated.Forthesetypesofagreements,thesedatesarenotindicatedby“effectivedate”but“lastrevision”or“lastupdated.” CompareAccounts AdvertiserDisclosure × TheoffersthatappearinthistablearefrompartnershipsfromwhichInvestopediareceivescompensation.Thiscompensationmayimpacthowandwherelistingsappear.Investopediadoesnotincludealloffersavailableinthemarketplace. Provider Name Description RelatedTerms BlockchainExplained Ablockchainisadigitallydistributed,decentralized,publicledgerthatexistsacrossanetwork.ItismostnoteworthyinitsusewithcryptocurrenciesandNFTs. more SECForm485A24E SECForm485A24Eisaregistrationstatementforseparateaccounts. more SECForm144:NoticeofProposedSaleofSecuritiesOverview SECForm144:NoticeofProposedSaleofSecuritiesisfiledwiththeSecuritiesandExchangeCommissionorSECwhenplacinganordertosellthatcompany'sstockunderspecificcircumstances. more Addendum Anaddendumisanattachmenttoacontractthatmodifiesthetermsoftheoriginalcontract.Readaboutinsurance,lease,andrealestateaddendums. more InsideMandatoryBindingArbitration Mandatorybindingarbitrationrequiresthepartiestoresolvecontractdisputesbeforeanarbitratorratherthanthroughthecourtsystem. more Registration RegistrationiswhenacompanyfilesdocumentswiththeSECforapublicofferingand/orwhenbrokersbecomelegallyentitledtosellsecurities. more PartnerLinks RelatedArticles Stocks Speed-ReadSECFilingsforHotStockPicks SEC&RegulatoryBodies SECForm10Definition FinraExams TipsforPassingtheSeries6Exam SEC&RegulatoryBodies SECFilings:FormsYouNeedToKnow FinancialAdvisorCareers BecomingARegisteredInvestmentAdvisor FinraExams SucceedingattheSeries63Exam