SEC Posts FAQs re Confidential Submission of Registration Statements

News Brief

By Cydney Posner

The SEC has now posted some FAQs regarding the confidential IPO registration statement submission process permitted under the JOBS Act.  As you may recall, the Act allows an "emerging growth company" (EGC) to submit a draft IPO registration statement for confidential, non-public review by the SEC staff prior to public filing, so long as the submission is made public at least 21 days before the company commences its road show, as defined in Rule 433(h)(4).

  • A draft registration statement may be submitted by any EGC "prior to its initial public offering date," defined as the "date of the first sale of common equity securities of an issuer pursuant to an effective registration statement under the Securities Act of 1933." The phrase "date of the first sale" could include, in addition to a company's IPO, an offering of common equity under an employee benefit plan registered on Form S-8 as well as a selling shareholder's secondary offering registered on a resale registration statement. However, registered sales of securities other than common equity do not disqualify a company from using the confidential submission process as long as it is an EGC.
  • The confidential submission process is not available for Form 10 or Form 20-F Exchange Act registration statements; it applies only to the Securities Act registration process. 
  • Foreign private issuers can use the confidential submission process if they are EGCs. A foreign private issuer that is not an EGC may qualify to submit a draft registration statement on a non-public basis for staff review if it meets the requirements for non-public submissions as set forth in Corp Fin's policy on Non-Public Submissions from Foreign Private Issuers. In either case, foreign private issuers must submit their draft registration statements in the same manner and to the same address as domestic companies that are EGCs. The email address previously available for submissions by foreign private issuers is no longer active.
  • An EGC will not need to submit its draft registration statement under cover of a Rule 83 request to preserve confidentiality.
  • There is no filing fee for the confidential submission because it is technically not a "filing." The filing fee is due when the registration statement is first filed publicly on EDGAR. 
  •  The confidential submission of the draft registration statement 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.
  • The Act does not specify what needs to be included in a "draft registration statement"; however, the SEC staff does expect the filings to be substantially complete, including a signed audit report (as required for non-public submissions by foreign private issuers), and will defer review of any draft registration statement submitted that is materially deficient. (The staff reminds companies in this context that, if the company proceeds with the offering, the submissions will become public.) Because the submission is not a "filing," it is not required to be signed or to include the consent of auditors and other experts. In addition, as is the case with publicly filed registration statements, under existing rules, EGCs may omit limited information from their initial submissions, such as the public offering price or other offering-related information.
  • With regard to the complex question of how the requirement to make the submission public 21 days before the "road show" interacts with the new test-the-waters rules, which permit companies to hold meetings with potential investors (QIBs and institutional investors) that could be viewed as part of a "road show," the staff will allow an EGC to treat those test-the-waters meetings as not being road shows that would trigger public filing of the registration statement 21 days in advance:
    • The confidential submissions have to be publicly filed at least 21 days before the issuer conducts a ‘road show' as defined in Rule 433(h)(4). That rule defines ‘road show' as ‘an offer…that contains a presentation regarding an offering by one or more members of the issuer's management…and includes discussion of one or more of the issuer, such management, and the securities being offered.'
      • "In a traditional underwritten public offering that does not include communications made in reliance upon new Section 5(d) [test the waters], the road show should be easy to identify – it would be those meetings traditionally viewed as the road show when the emerging growth company and underwriters begin actively marketing the offering. In that case, the company should estimate when it expects to begin the road show and publicly file its confidential submissions at least 21 days before that date. As is the case now, it is helpful if the company keeps the staff that is reviewing the registration statement informed about the company's expected schedule.
        • "It is possible that there may be meetings with potential investors under the new test-the-waters communications provisions that could also be viewed as coming within the Rule 433(h)(4) definition of road show, which could theoretically trigger a requirement to file the registration statement 21 days before those meetings. New Section 5(d), however, specifically contemplates that test-the-waters communications may take place before filing a registration statement.
          • "In order to read these various provisions in a consistent fashion so as to allow test-the-waters communications before a registration statement is filed and have the registration statement publicly filed at least 21 days before the commencement of the road show, we will not object if an emerging growth company does not treat test-the-waters communications conducted in reliance on new Section 5(d) as a road show for purposes of Section 6(e). Please note that Section 5(d) test-the-waters communications are limited to communications with QIBs and institutional accredited investors."
          • If an EGC does not conduct a traditional road show or engage in activities that would come within the definition of a road show, other than compliant test-the-waters communications, then its registration statement and confidential submissions should be filed publicly on EDGAR no later than 21 days before the anticipated date of effectiveness of the registration statement. If the EGC does not conduct a traditional road show, but has communications that are within the definition of road show and are not test-the-waters communications (e.g., a meeting with potential investors that are not QIBs or institutional accredited investors), the registration statement would need to be filed at least 21 days before those road show-like communications.
          • The public filing must include the initial confidential submission and all of its amendments. However, there is currently no provision on EDGAR for filing of draft registration statements. The staff indicated that, for now, these materials should be filed as exhibits to the first registration statement filed on EDGAR, with each confidential submission filed as a separate Exhibit 99. Of course, the first filed registration statement must be complete with signatures, signed audit reports, consents, exhibits and filing fees.
          • An issuer that qualifies as an EGC that is in registration at the time of the enactment of the JOBS Act can, if desired, contact its SEC review team to coordinate a switch to the confidential submission process for future amendments. The company will not need to withdraw the existing registration statement and confidentially submit a new draft registration statement.
          • An EGC that makes the switch to the confidential submission process for subsequent amendments will not be able to satisfy the requirement to publicly file the registration statement at least 21 days before the road show with its earlier public filing. All confidential submissions must be filed on EDGAR at least 21 days before the road show.
          • If an EGC submits its draft registration statement on a confidential basis, the company may not subsequently rely on the Rule 134 safe harbor to make a public communication about its offering until the registration statement is publicly filed.
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