In a move to facilitate capital formation for initial public offerings (IPOs), the SEC’s Division of Corporate Finance announced that it is enhancing the accommodations available to issuers who submit draft registration statements for nonpublic review.

The draft registration statement accommodations were first granted in 2012 under the JOBS Act to allow Emerging Growth Companies (EGCs) to submit a confidential and nonpublic draft registration statement for review. That ability was expanded to all companies in 2017.

Now, a new set of accommodations will:

• allow Forms 10, 20-F, or 40-F to be submitted as draft registration statements under Section 12(b) and 12(g);
• allow companies to submit draft registration statements regardless of when they became subject to reporting requirements under Sections 13(a) or 15(d) of the Exchange Act;
• allow companies to omit certain underwriter disclosures from their initial submissions, as long as they include it in later submissions and public filings;
• allow the nonpublic review process for de-SPAC transactions, as long as the target is able to submit a draft registration statement.

“Over 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,” said Cicely LaMothe, Acting Director of the SEC’s Division of Corporation Finance. “These enhanced accommodations will further support capital formation while retaining investor protections available to purchasers in public offerings.”

“Making IPOs attractive again”

The SEC stated that the change is intended to facilitate the raising of capital for IPOs. The loosening of draft registration statement requirements mirrors Acting SEC Chairman Mark Udeya’s recent call to “make IPOs attractive again” by “[a]ppropriately tailoring the Commission’s wide-reaching disclosure requirements for newly public companies may, on the margin, incentivize more companies to go public. In turn, venture funds may see more attractive exit opportunities for their investments and decide to provide funding.”