By: David M. EatonThe SEC announced earlier this summer (and supplemented that announcement late last week with additional information) that it has expanded the availability of its popular procedure for confidential non-public review of, and comment on, draft initial public offering registration statements. This procedure was originally mandated by 2012’s JOBS Act. In its pre-existing iteration, the procedure allows “emerging growth companies” (EGCs) to submit draft registration statements confidentially to the SEC for review, provided that (1) the issuer has not yet sold common stock in an SEC-registered IPO and (2) the draft registration statements and all amendments thereto are publicly filed at least 15 days prior to any “road show”. This process is available not just for a common stock IPO registration statement, but also for any pre-IPO registration statement an EGC might file. An EGC is a company with annual gross revenues of less than $1.07 billion during its most recent fiscal year. Now, in addition to the confidential review process for EGCs which remains in effect, the SEC announced that it will review, on a confidential basis, draft submissions of the following registration statements filed by any issuer (including foreign private issuers)—not just EGCs:
- IPOs. Securities Act IPO registration statements (or other initial Securities Act registrations)—again, from any issuer. This will permit larger pre-public companies to take advantage of the confidential submission process.
- Listings, But No Offerings—Spin Offs. Securities Exchange Act registration statements that relate to an initial direct listing on a stock exchange without a concurrent public offering. This will be useful to companies going public via a “spin off” from another public company.
- Follow-On Offerings. Securities Act registration statements for an offering within a year of the company’s initial Securities Act or Securities Exchange Act registration statement. This should prove useful to companies conducting a “follow-on” stock offering in the wake of a successful IPO. In addition to raising additional capital for the company, follow-ons have traditionally allowed pre-public shareholders to sell some of their holdings in the common situation where underwriters were reluctant to let them “piggy back” on the IPO registration statement (although often the follow-on registration statements are not selected for SEC review, as the recent IPO registration statement would have received a full inspection).
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