SEC Expands Confidential Regulation Filings; Laura Anthony at LawCast Comments
Posted by Laura Anthony, Esq. on July 10, 2017
SEC Expands Confidential Regulation Filings; Laura Anthony at LawCast Comments- On June 19, 2017, the SEC announced that the Division of Corporation Finance will permit all companies to submit draft registration statements, on a confidential basis. Confidential draft submissions will now be available for all Section 12(b) Exchange Act registration statements, initial public offerings (IPO’s) and for secondary or follow-on offerings made in the first year after a company becomes publicly reporting.
The SEC has adopted the change by staff prerogative and not a formal rule change. On June 29, 2017, the SEC issued guidance on the change via new FAQs. The new policy is effective July 10, 2017.
Title I of the JOBS Act initially allowed for confidential draft submissions of registration statements by emerging growth companies but did not include any other companies, such as smaller reporting companies. Regulation A+ as enacted on June 19, 2015, also allows for confidential submissions of an offering circular by companies completing their first Regulation A+ offering. The new policy does not change or limit the current process and procedures for confidential submissions by emerging growth (or Regulation A+) issuers.
In its press release, Director of the Division of Corporation Finance Bill Hinman stated, “[T]his is an important step in our efforts to foster capital formation, provide investment opportunities, and protect investors. This process makes it easier for more companies to enter and participate in our public company disclosure-based system.”
The SEC also considers this change as helpful in its efforts to improve the slow IPO market. SEC Chair Jay Clayton said, “By expanding a popular JOBS Act benefit to all companies, we hope that the next American success story will look to our public markets when they need access to affordable capital. We are striving for efficiency in our processes to encourage more companies to consider going public, which can result in more choices for investors, job creation, and a stronger U.S. economy.”