On March 3, 2025, the Division of Corporation Finance of the Securities and Exchange Commission (“SEC”) issued new guidance to allow all registrants to confidentially file registration statements with the SEC even if the registrant has been a reporting company for more than 12 months. This guidance could be a gamechanger for smaller public companies that might otherwise suffer downward stock price pressure after publicly filing a registration statement for a follow-on offering and during the entire period of SEC review.
The expansion of the confidential draft registration statement program to reporting companies of all ages and life cycles is a departure from past practice. Beginning in 2012, only emerging growth companies could submit confidential draft registration statements with the SEC to begin the initial public offering (“IPO”) process. In 2017, the SEC expanded the IPO draft registration statement process to all IPO registrants, and to companies conducting a follow-on offering within 12 months of becoming a reporting company. Now, any follow-on offering can initially be submitted as a confidential draft registration statement.
For traditional IPOs, the confidential submission of registration statements has not changed. Issuers can submit draft registration statements that will be reviewed confidentially by the SEC. The issuer must make a public registration statement filing at least 15 days before the IPO roadshow or at least 15 days before the requested effective date of the registration statement. The additional accommodation is for nonpublic review of the initial registration of a class of securities under the Exchange Act on Forms 10, 20-F or 40-F.
For follow-on offerings, the SEC is now accepting confidential draft registration statements for any offering under the Securities Act regardless of when the issuer first became a reporting company. The company must publicly file the registration statement at least two business days before the requested effective date of the registration statement. Companies should note that if the SEC has comments on the follow-on registration statement, the registration statement addressing the SEC’s initial round of comments must be publicly filed. In other words, if the SEC has comments on the follow-on registration statement, the company will not have the accommodation of filing confidentially after the initial draft registration statement filing. The main advantage for follow-on offerings will be if the SEC chooses not to review the registration statement.
In IPOs or follow-on offerings, a company may omit (1) financial information the company reasonably believes will not be required at the time the registration statement is publicly filed; and (2) the underwriter’s name from the initial submission of the confidential draft registration statement. These accommodations from the SEC align with remarks from acting SEC Chairman Mark Uyeda, who has emphasized the SEC’s commitment to facilitating capital formation, particularly for small businesses. This guidance is a welcome change for smaller companies that have faced tremendous pressure in the volatile capital markets of the past few years. If you have any questions about this new guidance or submitting confidential draft registration statements, please contact a member of Harter Secrest & Emery’s Securities and Capital Markets group.