In a recent effort to foster increased public offering activity, the U.S. Securities and Exchange Commission (SEC) announced on June 29, 2017 that it will permit all companies to submit voluntary draft registration statements relating to initial public offerings (IPOs), certain follow-on offerings and national securities exchange listings for non-public review. This process will be available for nearly all offerings made in the first year after a company has entered the public reporting system. This benefit will take effect on July 10, 2017.
So, why is this an important change?
This degree of confidentiality will allow companies to have more flexibility in structuring their offering. Prior to the announcement, only IPOs by emerging growth companies (EGCs), along with various foreign private issuer offerings, were able to participate in confidential reviews of draft registration statements. The expansion of confidential review to all enterprises, is intended to “…foster capital formation, provide investment opportunities, and protect investors,” said the Director of the Division of Corporation Finance, Bill Hinman, in a June 30 statement.
The non-public review process reduces the potential exposure to market fluctuations that could negatively impact an offering or harm the public shareholders. More companies now have the capacity for better planning of their offering and improved protections.
This could be a huge advantage for some. What will this change mean for you?