On June 29, the Division of Corporation Finance (Division) of the Securities and Exchange Commission announced that, beginning on July 10, the Division will permit all issuers to confidentially submit to the Division, for nonpublic review, draft registration statements in connection with initial public offerings (IPOs) and in certain other cases. This was previously only available to emerging growth companies (EGCs) under the Jumpstart Our Business Startups Act for their IPOs.
Specifically, the Division will review on a nonpublic basis:
- a draft initial registration statement (and related revisions) under the Securities Act of 1933, as amended (Securities Act), in connection with an IPO, so long as the issuer publicly files its registration statement and nonpublic draft 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);
- a draft registration statement for the initial registration of a class of securities under Section 12(b) of the US Securities Exchange Act of 1934, as amended (Exchange Act), so long as the issuer publicly files its registration statement and nonpublic draft submissions at least 15 days prior to the expected effective date of the registration statement for its listing on a national securities exchange; and
- draft registration statements submitted within 12 months of the effective date of (1) an issuer’s initial registration statement under the Securities Act or (2) an issuer’s Exchange Act registration statement under Section 12(b), in each case, so long as the issuer makes such registration statement and nonpublic draft submission publicly available on EDGAR at least 48 hours prior to any requested effective time and date. In such case, the Division will only review the initial submission, and an issuer should respond to comments from the staff of the SEC in a public filing (not with a revised draft registration statement). Any subsequent review will be conducted by the Division in accordance with its normal procedures.
The Division noted that a foreign private issuer (including a Canadian issuer filing under the Multijurisdictional Disclosure System) may elect to proceed pursuant to the procedures (1) outlined in its announcement and described above, (2) available to EGCs (if the issuer otherwise qualifies as an EGC) or (3) outlined in the SEC’s prior statement on nonpublic submissions from foreign private issuers (which is accessible here).
The Division indicated that it will not delay processing of a nonpublic draft registration statement if an issuer omits financial information that the issuer reasonably believes will not be required at the time the registration statement is publicly filed (similar to the relief granted to EGCs under the Fixing America’s Surface Transportation Act).
The Division also issued FAQs with respect to its expanded nonpublic review procedures, which, among other things, provide the following:
- an issuer may request confidential treatment of its draft registration statement and, in such case, should include a legend at the top of each page of the draft registration statement indicating that it has requested confidential treatment pursuant to Rule 83;
- the staff of the SEC will publicly release its comment letters and issuer responses to comment letters on nonpublic draft submissions on EDGAR no less than 20 business days after the registration statement is effective;
- an issuer may not use the expended nonpublic review process to submit a draft post-effective amendment to an effective registration statement;
- an issuer of asset-backed securities is not permitted to utilize the SEC’s expanded nonpublic review process;
- an issuer that is not an EGC may not use test-the-waters communications with qualified institutional buyers and institutional accredited investors pursuant to Securities Act Section 5(d);
- an issuer that submits a draft registration statement for nonpublic review may not make a public communication about its offering in reliance on the safe harbor provided by Rule 134 under the Securities Act because the safe harbor is not available until an issuer files a registration statement that satisfies the requirements of Rule 134; and
- an issuer that submits a draft registration statement for nonpublic review may make a public communication about its offering in reliance on Rule 135 under the Securities Act, but such a public statement may impact the SEC’s ability to withhold the draft registration statement in response to a Freedom of Information Act request.