On June 29, 2017, the SEC’s Division of Corporation Finance announced that, beginning on July 10, 2017, it will permit confidential submissions of draft registration statements for all initial public offerings (IPOs), including by issuers that do not qualify as emerging growth companies (EGCs) under the JOBS Act. The Division of Corporation Finance posted FAQs addressing preliminary questions regarding the process and scope of the expanded procedures.
The confidential submission process will be available for all initial draft registration statements and related amendments filed either under the Securities Act or in connection with the initial registration of a class of securities pursuant to Section 12(b) of the Exchange Act, including in respect of spin-offs.
To take advantage of the confidential submission process in connection with Securities Act registration statements, an issuer must confirm it will publicly file its registration statement, together with any confidential draft submissions, at least 15 days prior to its road show, if any, or otherwise before the requested effective date of the registration statement. Similarly, for issuer eligibility in connection with Exchange Act registration statements, an issuer must confirm it will publicly file its registration statement, together with any confidential draft submissions, at least 15 days prior to the requested effective date of the registration statement.
Confidential submission will also be available for follow-on registrations within 12 months of the effective date of a Securities Act or Section 12(b) Exchange Act registration statement, provided the issuer confirms it will make available on EDGAR its registration statement and confidential draft submissions at least 48 hours prior to the requested effective time and date of registration. For follow-on registrations, confidential submission will be limited to the initial registration statement submission, and will not extend to any related amendments.
The Division’s announcement clarified that it does not affect the confidential review process for EGCs provided in the JOBS Act, nor does it prevent foreign private issuers from choosing to avail themselves of prior SEC staff guidance of May 30, 2012 or the procedures available to EGCs, if applicable.
The announcement also indicated that the Division would consider reasonable requests for accelerated registration statement review, and confirmed that it would not delay registration statement review on the basis of omitted financial information if the issuer reasonably believes such financial information will not be required at the time the registration statement is publicly filed.
This announcement is the first of what is expected to be a number of reforms designed to enhance capital formation in public markets that SEC Chairman Jay Clayton has said is an important objective of the agency. This change is a welcome development that extends the very popular JOBS Act enhancement by providing issuers with increased flexibility and easing the initial public offering process.
Update. On August 17, 2017, the Division updated its June 29, 2017 announcement. The update clarified that the non-public review process is available for an initial registration of a class of securities on Forms 10, 20-F and 40-F. The update also states that an issuer that has a registration statement on file and not in the non-public review process may switch to the non-public review process for future pre-effective amendments to its registration statement, provided the issuer is eligible to participate in the non-public review process and agrees to publicly file its amended registration statement and all draft amendments in accordance with the time frame specified in the Division’s announcement.