On March 3, 2025, the Securities and Exchange Commission’s (SEC’s) Division of Corporation Finance announced that it has expanded the accommodations available to companies for the nonpublic review of draft registration statements.
As described in the announcement, the new accommodations:
- Permit issuers to submit draft registration statements regardless of how much time has passed since they became subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act. Previously, issuers were limited to submitting a draft registration statement within the 12-month period following the effective date of the IPO or Section 12(b) registration statement. Eliminating this time constraint and allowing all reporting companies to take advantage of the confidential review process for any type of offering represents a meaningful effort to facilitate issuers’ ability to access the registered capital markets or conduct a registered business combination transaction.
- As is the case with the historical SEC staff policy on draft registration statements for certain follow-on offerings, the nonpublic review will be limited to the initial draft submission, and the issuer must make the registration statement and its nonpublic draft submission publicly available on EDGAR at least two business days prior to any requested effective time and date. In a welcome, and potentially significant development, the updated policy states that the staff “will consider reasonable requests to expedite this two business-day period and encourage issuers and their advisors to review their transaction timing with the staff assigned to the filing review.”
- Similar to the historical staff policy, issuers submitting a draft registration statement will be permitted to omit issuer and nonissuer financial statements they reasonably believe will not be separately required in the registration statement when it is publicly filed.
- Permit issuers to omit the names of any underwriters from their initial draft registration statement submissions, when otherwise required by Items 501 and 508 of Regulation S-K. This is a sensible accommodation that will allow issuers to commence the SEC staff review and comment process before formally engaging the underwriters and/or before the underwriters have signed off on preliminary diligence matters. Issuers will be required to include the name of the underwriter(s) in subsequent submissions and public filings.
- Expand the availability of the nonpublic review process for the initial registration of a class of securities under the Securities Exchange Act to include both Section 12(b) and Section 12(g) registration statements on Forms 10, 20-F or 40-F.
- Expand the availability of the nonpublic review process for a de-SPAC transaction in situations where the SPAC is the surviving entity (i.e., SPAC-on-top structure), as long as the target is eligible to submit a draft registration statement.
Issuers can rely on these expanded accommodations immediately.
The willingness of the Division of Corporation Finance to broaden the scope of the confidential submission and review process is a welcome development that is likely to reduce friction for both new and existing reporting companies by reducing the potential for lengthy exposure to market fluctuations that can adversely affect an offering process and harm existing public shareholders.
We believe these accommodations are likely to be followed by additional changes designed to remove proverbial red tape where there is no clear investor protection concern. See, e.g., Acting Chair Mark Uyeda’s recent public statements calling on the SEC staff to submit recommendations for ways to appropriately tailor the SEC’s disclosure requirements for newly public companies, to incentivize more companies to go public.
This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.