Since the adoption of the Fixing America’s Surface Transportation Act (FAST Act) on December 4, 2015, the Division of Corporation Finance (the Division) of the Securities and Exchange Commission has issued six Compliance and Disclosure Interpretations (C&DIs) relating to the FAST Act, the first two of which were summarized in the Corporate and Financial Weekly Digest edition of December 18, 2015 and the remainder of which were summarized in the Corporate and Financial Weekly Digest edition of January 8, 2016. On August 17, the Division updated FAST Act C&DI #1 and issued new Securities Act Forms C&DI 101.05, which modified and supplemented the original guidance. The FAST Act provides that an emerging growth company (EGC) conducting an initial public offering (IPO) or a follow-on offering within one year of its IPO, or filing an initial registration under the Securities Exchange Act of 1934 (the Exchange Act) may file registration statements that omit historical financial information for a period the EGC reasonably believes would not be required in the filing at the time of the contemplated offering. The Division’s original guidance specified that an EGC would be required to include in its filings or confidential submissions interim financial statements for a period that will be part of a longer interim or annual period covered by financial statements required to be included in a subsequent public filing at the time of the offering.
On August 17, the Division updated FAST Act C&DI #1 and changed its position with regard to the presentation of interim financial statements in confidential submissions by an EGC, advising that an EGC may omit from such confidential submissions interim financial information that the EGC reasonably believes will not be required to be presented separately at the time the EGC launches its offering. Also on August 17, following the expansion of the non-public review process to non-EGCs in certain circumstances (which was previously discussed in the Corporate and Financial Weekly Digest editions of July 7, 2017 and August 25, 2017), the Division adopted Securities Act Forms C&DI 101.05, extending to non-EGCs accommodations similar to those provided to EGCs with regard to the omission of financial information from confidential draft registration statements (but not from publicly filed registration statements). Under the Division’s new guidance with respect to non-EGCs, a non-EGC may omit from its confidential draft registration statement both annual and interim financial information that the issuer reasonably believes will not be required to be presented separately at the time the non-EGC files its registration statement publicly.
By way of illustration based on examples provided by the Division, in a November 2017 confidential draft registration statement for an offering by an EGC or a filing by a non-EGC that is expected to occur in April 2018, the issuer may not only omit financial information for the earliest year that would not be required for an April offering or filing, as applicable (meaning that, for purposes of the confidential draft registration statement, the EGC may omit financial information for 2015—as an EGC is only required to present annual financial information for two fiscal years; and the non-EGC may not only omit financial information for 2014—as a non-EGC is required to present annual financial information for three fiscal years), but may also omit interim financial information for 2016 and 2017 (as such interim financial information would not separately be required at the time of the offering, in the case of an EGC, or at the time of public filing, in the case of a non-EGC). The staff of the SEC has not changed its guidance, however, that, regardless of whether the issuer is an EGC or a non-EGC, a publicly filed registration statement must contain interim period financial information that is otherwise required at the time of such public filing, if such interim financial information will be part of a longer interim or annual period that will be required to be included in the registration statement at the time of the offering or public filing, as applicable.