The SEC recently has taken several steps to ease the burdens of its filing procedures. In particular, it now will accept nonpublic drafts of certain registration statements from all issuers, expanding a benefit previously granted solely to IPOs of emerging growth companies (“EGCs”) by the JOBS Act of 2012. This relief does not extend the other EGC benefits to non-EGCs. In addition, on August 17, 2017, the SEC announced that it would no longer require issuers to include stand-alone interim financial information in their initial confidential filings if, in the case of EGCs, they reasonably believe it would not be required at the time of the offer or, in the case of non-EGCs, they reasonably believe it would not be required at the time of the first public filing.
Eligible Registration Statements
Voluntary nonpublic review by the SEC is available to all issuers for the following registration statements:
- Initial draft registration statements and subsequent amendments (including for IPOs on Forms S-1 and F-1 and for the initial registration of a class of securities under Exchange Act Section 12(b)), until 15 days prior to a road show or (if there is no road show) the requested effective date of the filing, or at least 15 days prior to the anticipated effective date of the registration statement for an initial listing on a national securities exchange, as applicable; and
- Follow-on draft registration statements (but not subsequent amendments) filed within 12 months of the effective date of the issuer’s initial Securities Act or Exchange Act Section 12(b) registration statement, until 48 hours prior to the requested effective date and time of the registration statement.
Based on the SEC’s announcements, it seems that the Form ID application for EDGAR filings codes has not been updated to reflect the new procedures. Accordingly, issuers that need EDGAR access codes to submit initial registration statements and wish to remain confidential should indicate on their Forms ID that they intend to use the codes to submit a draft registration statement pursuant to the JOBS Act §106, even if they are not EGCs.
Issuers that have publicly filed registration statements and are in SEC review can switch to nonpublic review for future pre-effective amendments. However, they must be eligible to participate in the nonpublic review process and agree to publicly file their amended registration statements and all draft amendments in accordance with the time frames specified above.
The SEC’s expansion of filing procedures for certain registration statements is part of what is expected to be a number of reforms to facilitate capital formation in the United States, the effects of which remain to be seen. All issuers now can keep certain SEC filings confidential and potentially reduce the time and cost associated with preparing certain financial statements in their registration statements. This might prove attractive to issuers in fluctuating market conditions and facilitate dual-track processes of concurrently pursuing IPOs and sales of companies. On the other hand, the SEC relief on filing procedures could make it more difficult for banks to advise issuers on the optimal timing for offerings and make investors more apprehensive to invest given they will have less time to familiarize themselves with IPO candidates before they come to market.
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Donald R. Reynolds, S. Halle Vakani, and Holly A. Wagner are members of the Capital Markets practice group of Wyrick Robbins, which represents clients across a broad range of industries in connection with their significant financing transactions and advises public companies on SEC and stock exchange rules, securities law compliance, disclosure and corporate governance matters. The Capital Markets group publishes Client Alerts periodically as a service to clients and friends. The purpose of this Client Alert is to provide general information, and it is not intended to provide, and should not be relied upon as, legal advice.