The Corp Fin staff has posted new and updated CDIs related to omission of financial information from registration statements by emerging growth companies and, under the recently expanded guidance that allows non-EGCs to file registration statements confidentially (see this PubCo post), by non-EGCs. The updated CDI under the FAST Act and the identical new CDI under the Securities Act appear to refine an earlier position taken by the staff.

FAST Act Updated Question 1 and Securities Act Forms New Question 101.04

Section 71003 of the FAST Act allows an EGC to omit from its filed registration statement annual and interim financial information that “relates to a historical period that the issuer reasonably believes will not be required to be included…at the time of the contemplated offering.” In the CDI, the staff indicates that interim financial information “relates to” both the interim period and to any longer historical period (either interim or annual) into which the financial information has been or will be included. Accordingly, under Section 71003, an EGC may not omit from its filed registration statements interim financial information that will be included in a historical period that the issuer reasonably believes will be required to be included at the time of the contemplated offering. However, under staff policy, an EGC will be permitted to omit from its draft registration statement interim financial information that it reasonably believes will not be required to be presented separately at the time of the contemplated offering. Here is the staff’s new example:

“For example, consider a calendar year-end Emerging Growth Company that submits a draft registration statement in November 2017 and reasonably believes it will commence its offering in April 2018 when annual financial information for 2017 will be required. This issuer may omit from its draft registration statements its 2015 annual financial information and interim financial information related to 2016 and 2017. Assuming that this issuer were to first publicly file in April 2018 when its annual information for 2017 is required, it would not need to separately prepare or present interim information for 2016 and 2017. If this issuer were to file publicly in January 2018, it may omit its 2015 annual financial information, but it must include its 2016 and 2017 interim financial information in that January filing because that interim information relates to historical periods that will be included at the time of the public offering.”

Only EGCs are may take advantage of the relief provided by Section 71003 of the FAST Act, which allows an EGC to omit financial information that ‘relates to a historical period that the issuer reasonably believes will not be required to be included…at the time of the contemplated offering.’” However, under staff policy, an issuer that is not an EGC may omit from its draft registration statement interim and annual financial information that it reasonably believes will not be required to be presented separately at the time it files its registration statement publicly. (See this PubCo post.) The issuer is not allowed to omit any required financial information from its filed registration statement. Here is the staff’s example:

“For example, consider a calendar year-end issuer that is not an Emerging Growth Company that submits a draft registration statement in November 2017 and reasonably believes it will first publicly file in April 2018 when annual financial information for 2017 will be required. This issuer may omit from its draft registration statements its 2014 annual financial information and interim financial information related to 2016 and 2017 because this information would not be required at the time of its first public filing in April 2018.”