Locke Lord QuickStudy: SEC’s Corp Fin Extends Confidential Review of Draft Registration Statements and Provides Guidance

July 5, 2017

On June 29, 2017, the Securities and Exchange Commission (the “SEC”) announced that the Division of Corporation Finance (the “Division”) will permit all companies to submit draft registration statements relating to initial public offerings (“IPOs”), certain follow-on offerings and direct listings for review on a non-public basis.1

The expansion allows not only emerging growth companies,2 who currently are permitted to submit non-public draft registration statements, but all companies, both domestic and foreign private issuers, planning to go public and issuers registering a class of securities under Section 12(b) of the Securities Exchange Act of 1934, including spin-offs, to submit non-public draft registration statements. An issuer seeking to use this process will need to confirm in a cover letter that it will publicly file its registration statement and nonpublic draft submissions at least 15 days prior to any road show or, in the absence of a road show, at least 15 days prior to the requested effective date of the registration statement.

In addition, the Division will also accept draft registration statements submitted prior to the end of the 12th month following the effective date of an issuer’s IPO or Form 10 registration statement for non-public review. The issuer will also need to confirm in its cover letter that it will publicly file its registration statement and nonpublic draft submissions so that they are publicly available on the EDGAR system at least 48 hours prior to any requested effective time and date.

The Division will not delay processing a draft registration statement if an issuer reasonably believes that omitted financial information will not be required at the time the registration statement is publicly filed and will consider an issuer’s specific facts and circumstances in connection with any request made under Rule 3-13 of Regulation S-X.

The Division also issued FAQs to provide guidance for issuers contemplating the voluntary submission of draft registration statements.3 In the FAQs, the Division makes clear that an issuer that is not an emerging growth company may not use test-the-waters communications with qualified institutional buyers and institutional accredited investors pursuant to Section 5(d) of the Securities Act of 1933. The FAQs also make clear that a draft registration statement submitted under the procedure 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 because it is not deemed to be filed with the SEC. Further, because the voluntary submission of a draft registration statement is not a filing of a registration statement, the filing fee is not due at that time. The Division advises issuers that are not emerging growth companies who want confidential treatment for the draft registration statement that is submitted to consider requesting that treatment under Rule 83.

The expanded non-public review process will take effect on July 10, 2017.4

1 Draft Registration Statement Processing Procedures Expanded, June 29, 2017, available here.
2 The term emerging growth company means an issuer that had total annual gross revenues of less than $1,070,000,000 during its most recently completed fiscal year. See SEC Rule 12b-2.
3 Voluntary Submission of Draft Registration Statements – FAQs, June 30, 2017, available here.
4 An issuer that does not yet have EDGAR access codes will need to file a Form ID to obtain them. A new issuer should indicate on that form that it intends to use the codes to submit a draft registration statement pursuant to JOBS Act Section 106 regardless of whether it is an emerging growth company.