On June 29, 2017, the Securities and Exchange Commission (SEC) announced that it will permit all companies to confidentially submit draft registration statements for review under the Securities Act. The new policy also expands the confidential submission process to apply not only to IPOs but also to most offerings made in the first year after a company has entered the public reporting system, but it will not affect the confidential filing or other procedures that may be used by emerging growth companies (EGCs). The policy takes effect on July 10, 2017.
As provided for by the JOBS Act, since 2012 the SEC has permitted EGCs to submit initial registration statements on a confidential basis. The confidential submission process is almost universally used by EGCs because it allows an EGC to avoid public scrutiny of its offering process until the EGC is ready to make its disclosures public. SEC rules also require that EGCs file a public registration statement along with all draft non-public submissions at least 15 days prior to any road show or, in the absence of a road show, at least 15 days prior to the requested effective date of the registration statement, and all companies filing registration statements under this new policy will be required to adhere to these rules as well.
As it does with EGCs, the SEC will also permit an issuer to omit financial information at the time the registration is submitted for confidential review if the issuer reasonably believes that the omitted financial information will not be required at the time the registration statement is publicly filed.
Under the new policy, companies that are not EGCs will be entitled to only a single non-public submission and review. Any amendment responding to SEC comments will have to be filed publicly.
The confidential review process is also being made available to companies filing an initial registration of a class of securities on Form 10 under the Securities Exchange Act.
If you have any questions or would like further information about the new SEC policy or the public offering process, please contact any member of the Lowenstein Sandler Capital Markets Group.
