A new SEC rule went into effect on July 10th of this year that now allows ALL companies to submit draft registration statements for review on a confidential basis (for non-public review). The process is available for IPOs as well as most offerings made in the first year after a company has entered the public reporting system.
As part of the standard IPO registration process, companies must submit information on their financials and business strategies to the SEC. Until now, only emerging growth companies (ECGs - companies with less than $1 billion in annual revenue), could keep those details out of the public eye until just before shares would be sold. The extension of this benefit to all companies is designed to provide everyone undertaking an IPO with more flexibility in planning their offering and, according to the SEC, would, “reduce the potential for lengthy exposure to market fluctuations that can adversely affect the offering process and harm existing public shareholders”.
With this new ruling, the SEC hopes to breathe new life into a declining IPO market. In SEC Chairman Jay Clayton’s words, “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”.
For more information on this new SEC ruling, click here to read the full announcement from the SEC’s Division of Corporate Finance website.