Yesterday, the SEC announced that Corp Fin was “further facilitating capital formation by enhancing the accommodations available to companies for nonpublic review of draft registration statements.” You might recall that, in 2012, the 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. The process was a hit, and, 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. The new enhanced accommodations, announced yesterday, will “expand the types of forms eligible to be submitted as draft registration statements for nonpublic review and permit reporting companies to submit draft registration statements for nonpublic review regardless of how much time has passed since their initial public offering. In addition, companies will have added flexibility to start the review process earlier by omitting certain underwriter disclosures from their initial submissions.” According to Cicely LaMothe, Acting Director of Corp Fin, “[o]ver the years, staff have observed companies seeking to raise capital are taking advantage of the nonpublic review process when available. Expanding these popular accommodations will provide new and existing companies greater flexibility to explore and plan public offerings….These enhanced accommodations will further support capital formation while retaining investor protections available to purchasers in public offerings.”
As summarized in the announcement, the highlights of the enhanced accommodations include:
- “Expanding the availability of the nonpublic review process for the initial registration of a class of securities under the Exchange Act to include both Section 12(b) and Section 12(g) registration statements on Forms 10, 20-F, or 40-F.
- Permitting issuers to submit draft registration statements regardless of how much time has passed since they became subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act.
- Expanding the availability of the nonpublic review process for a de-SPAC transaction in situations where the SPAC is the surviving entity (i.e., SPAC-on-top structure) as long as the target is eligible to submit a draft registration statement.
- Permitting issuers to omit the name of the underwriter(s) from their initial draft registration statement submissions, when otherwise required by Items 501 and 508 of Regulation S-K, provided that they include the name of the underwriter(s) in subsequent submissions and public filings.”
In addition, issuers employing the enhanced accommodations are advised to follow the EGC process for submitting DRS. The staff also cautions issuers to keep Rule 83 in mind when submitting DRS, and advises that DRS and related correspondence will be kept confidential to the extent possible, subject to the provisions of applicable law.
Initial Exchange Act registrations. More specifically, the announcement indicates that, in a change from past practice, the staff will now expand “the availability of the nonpublic review process for the initial registration of a class of securities under Exchange Act to also include Forms 10, 20-F, or 40-F filed to register a class of securities under Exchange Act Section 12(g). As a result, an issuer may now submit for nonpublic review the initial registration of a class of securities on Forms 10, 20-F, or 40-F under either Exchange Act Section 12(b) or Exchange Act Section 12(g).” The staff advises in a note that the “nonpublic submission does not satisfy an issuer’s requirement to file the registration statement within 120 calendar days from the end of its fiscal year when required to register a class of securities under Section 12(g). Issuers availing themselves of the accommodation to submit the registration statement nonpublicly should do so early enough to receive staff comments and still meet the public filing deadline.”
Subsequent offerings and Exchange Act registrations. In a significant change, the staff will now “accept for nonpublic review a subsequent draft registration statement for any offering under the Securities Act or registration of a class of securities under either Section 12(b) or Section 12(g) of the Exchange Act regardless of how much time has passed since the issuer became subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act”—that is, to submit a DRS, the submission no longer needs to be made within 12 months following the effective date of the IPO or Section 12(b) registration statement. The staff advises that the issuer submitting a subsequent DRS “should confirm in its cover letter that it will file its registration statement and nonpublic draft submission such that they are publicly available on the EDGAR system at least two business days prior to any requested effective time and date,” a period that is consistent with the two business days in Rule 461 for requesting acceleration of the effective date. The staff indicates that it “will consider reasonable requests to expedite this two business-day period and encourage issuers and their advisors to review their transaction timing with the staff assigned to the filing review.” Corp Fin cautions that the staff may comment on these public filings, which could affect the timing of effectiveness. In addition, “issuers will need to publicly file Exchange Act registration statements on Forms 10, 20-F, and 40-F so that the full 30- or 60-day period, as applicable, will run prior to effectiveness.” (The staff notes here that a registration statement on Form 10, 20-F, or 40-F under Section 12(b) goes effective automatically 30 calendar days after the SEC receives approval of the company’s listing from the national securities exchange. A registration statement on Form 10, 20-F, or 40-F for registration under Section 12(g) goes effective automatically 60 calendar days after the company files the registration statement.)
The staff’s confidential review will apply only to the initial submission; the staff advises that issuers should respond to staff comments on a DRS with a public filing, not with a revised DRS. Further staff review will follow the normal process, including requests for acceleration under Rule 461. As before, the issuer will need to file the DRS at the time it publicly files its registration statement.
De-SPACs. With regard to de-SPACs, under rules adopted in 2024 (see this PubCo post and this PubCo post), the target may be required to be a co-registrant where the SPAC survives the business combination as the public company. The staff is permitting issuers to submit a DRS for a de-SPAC transaction confidential review as if it were a registration statement for an IPO “where the co-registrant target would otherwise be independently eligible to submit a draft registration statement under this policy.” Corp Fin believes this approach to be consistent with the SEC’s position that “the de-SPAC is the functional equivalent of the target’s initial public offering.”
FPIs. With regard to foreign private issuers, the accommodations permit FPIs that so choose, instead of submitting DRS under these enhanced accommodations, to follow the procedures available to EGCs (if they qualify as EGCs) or follow the guidance in the May 30, 2012 statement.
Content and staff processing. Although a DRS should be substantially complete, Corp Fin “will not delay processing if an issuer reasonably believes omitted financial information will not be required at the time the registration statement is publicly filed,” a position that is similar to the relief provided under the FAST Act, which allows an EGC “to omit 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.’” If requests are made under Rule 3-13 of Reg S-X (which permits the omission or substitution of certain financial statements upon formal request), the staff will consider “an issuer’s specific facts and circumstances.” The staff indicates that reasonable requests to expedite processing of draft and filed registration statements will be considered and encourages “issuers and their advisors to review their transaction timing with the staff assigned to the filing review.”
And, finally, in a key change from prior practice, under these enhanced accommodations, “the staff will allow issuers to omit the name of the underwriter(s) from their initial submissions, when such information is otherwise required by Items 501 and 508 of Regulation S-K, provided that they include the name of the underwriter(s) in subsequent submissions and public filings.”
Companies may submit questions about their eligibility to use the enhanced accommodations to CFDraftPolicy@sec.gov.
