The 2012 JOBS Act permitted Emerging Growth Companies to initiate the IPO process by submitting their IPO registration statements confidentially to the SEC for nonpublic review by the SEC staff. The confidential process was intended to allow an EGC to defer the public disclosure of sensitive or competitive information until it was almost ready to market the offering—and potentially to avoid the public disclosure altogether if it ultimately decided not to proceed with the offering. In 2017, Corp Fin extended that benefit to companies that were not EGCs, allowing them, for the first time, to submit confidential draft registration statements for IPOs, as well as for most offerings made in the first year after going public. (See this PubCo post and this PubCo post.) Yesterday, Corp Fin posted newly updated FAQs regarding voluntary submissions of DRS for nonpublic review under the expanded procedures. The FAQs are summarized below. One notable addition is an FAQ regarding de-SPACs.
(1) An issuer that is not an EGC that wants to submit a DRS for confidential review should submit its draft registration statement using EDGAR submission type DRS and follow the instructions (which are not limited to EGCs) regarding preparation and submission of DRS. Because the confidentiality provisions of Section 6(e)(2) (which provides that the SEC cannot be compelled to disclose information provided to the SEC in connection with a confidential DRS submission) are limited to DRS submissions by EGCs, an issuer that is not an EGC, but that wants to submit its DRS for nonpublic review under Corp Fin policy should “should consider requesting confidential treatment under Rule 83…for its draft registration statement and associated correspondence.”
(2) The original 2017 Corp Fin announcement about DRS submissions instructed issuers that do not have EDGAR access codes to check the JOBS Act § 106 box on the Form ID when applying for the necessary codes. There is no legal significance to checking that box when the issuer is not an EGC; checking the box just helps Corp Fin “preserve the nonpublic status of an issuer’s drafts until the issuer publicly files them.”
(3) To convey its agreement with the public filing guidelines in the Corp Fin announcement as required, an issuer should indicate its agreement in a cover letter to its DRS.
(4) To submit a Rule 83 request for confidential treatment for a DRS, the issuer may make its request electronically using submission type DRSLTR when it submits its electronic DRS. If it does, it need not also send paper copies of the request and the materials to Corp Fin or to the SEC’s FOIA Office. The issuer should include a legend at the top of each page of the electronically submitted DRS indicating that it has requested confidential treatment for the DRS pursuant to Rule 83.
(5) If an issuer uses Corp Fin’s expanded nonpublic submission process, the deadlines for public filing of its registration statement and related materials are as follows: for an IPO or an initial registration of a class of securities, the issuer must publicly file its registration statement, the initial nonpublic DRS and all draft amendments “at least 15 days before it conducts its road show or, if there is no road show, at least 15 days before the effective date. An issuer conducting an offering prior to the end of the twelfth month following the effective date of its initial Securities Act registration statement must publicly file its registration statement and its non-public draft submission of the registration statement no later than 48 hours prior to any requested effective date and time. As is the case for all filed registration statements, the first publicly filed registration statement should be complete, including signatures, signed audit reports, consents, exhibits and accompanied by any required filing fees.”
(6) When an issuer submits its responses to staff comments on its DRS, it should identify, in its response letters, all “information for which it intends to seek confidential treatment upon public filing to ensure that the staff does not include that information in its comment letters.”
(7) The relief provided by Section 71003 of the FAST Act—which permits an EGC to omit from its filed registration statements 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”—is not available to non-EGCs: a “registration statement must conform to the applicable rules and forms in effect on the initial filing date.” As a result, the staff will not process a publicly filed registration statement filed by a non-EGC if it omits financial information that it reasonably believes will not be required to be included in the registration statement at the time of the contemplated offering. The staff “will, however, process a draft registration statement that is substantially complete except for financial information the issuer reasonably believes will not be required at the time the registration statement is publicly filed.” [Emphasis added.]
(8) An issuer is not required to sign a DRS.
(9) A DRS submission is not required to be signed by the registrant or by any of its officers or directors, nor is it required to include the consent of auditors and other experts, as it is not filed with the SEC. Nor are those signatures and consents required upon public filing of the previous nonpublic submissions.
(10) If an issuer submits a DRS for nonpublic review, the registration filing fee is not due until the registration statement is first filed publicly on EDGAR. That’s because the voluntary submission of a DRS is not a filing, and Section 6(b) of the Securities Act requires payment at the “time of filing a registration statement.”
(11) Once the registration statement is effective, consistent with Corp Fin practice in all filing reviews, the staff will publicly release on EDGAR its comment letters and issuer responses on nonpublic draft submissions no earlier than 20 business days following the effective date of a registration statement.
(12) A Canadian issuer filing under the Multi-Jurisdictional Disclosure System may take advantage of these accommodations.
(13) An asset-backed securities issuer may not take advantage of these accommodations.
(14) An issuer may not use the draft submission process to submit a draft post-effective amendment to an effective registration statement.
(15) An issuer that is not an EGC may not use test-the-waters communications with QIBs and institutional accredited investors pursuant to Securities Act Section 5(d).
(16) The submission of the DRS does not constitute a filing for purposes of the prohibition in Section 5(c) against making offers of a security in advance of filing a registration statement.
(17) If an issuer submits a DRS for nonpublic review, it may not make a public communication about its offering in reliance on the Rule 134 safe harbor (communications limited to specified information not deemed a prospectus) because that safe harbor is not available until the issuer files a registration statement that satisfies the requirements of Rule 134.
(18) If an issuer submits a DRS for nonpublic review, it may make a public communication about its offering in reliance on Rule 135 (notice of a proposed offering to be registered under the Securities Act that meets certain conditions), but if it makes a public statement about its offering, that may affect whether the SEC can withhold the DRS in response to a FOIA request.
(19) EDGAR does not currently allow the entry of a co-registrant on draft registration statement submissions. As a result, if a registrant uses the confidential submission process to submit a DRS in connection with a de-SPAC transaction, the primary registrant should submit the DRS without the co-registrant’s CIK and related submission information and include in the DRS the information required by the applicable registration statement form, including required information about the target company. The primary registrant must add the co-registrant’s CIK and related submission information on EDGAR when it publicly files the registration statement. (See Section 7.3.3.1 Entering Submission Information of the EDGAR Filer Manual.) Co-registrants do not need to separately submit the DRS submissions or related correspondence in EDGAR because the primary registrant’s reporting history will include all DRS submissions and related correspondence.
