SEC expands private reviews of IPO plans

Starting today, a greater range of companies will be able to have their initial plans to go public reviewed away from the public’s gaze, as new leadership at the SEC looks to boost capital formation. 

The division of corporation finance will now accept voluntary draft registration statement submissions from all issuers for non-public review. The staff will take a private look at initial Securities Act registration statements and related revisions provided the issuer confirms in writing that it will file its registration statement and non-public draft submissions publicly at least 15 days before any roadshow, or at least 15 days before the requested effective date of the registration statement.

The SEC will also accept for non-public review draft registration statements submitted within the first year of the effective date of an issuer’s initial Securities Act registration statement or Securities Exchange Act Section 12(b) registration statement. An issuer submitting a draft registration statement for non-public review in these circumstances should state that it will publicly file its registration statement and non-public draft submission so that it is publicly available on the agency’s Edgar system at least 48 hours before any requested effective time and date.

These private reviews are only possible for initial submissions. If an issuer responds to staff comments on its draft registration statement, it should do so in a public filing, not with a revised draft registration statement.

William Hinman, who recently took the reins as director of the division, told delegates at the Society for Corporate Governance’s national conference that he had wanted to be able to make a quick change to SEC policy to encourage more companies to go public. The option to make a private filing will make companies more comfortable, said Hinman, who recently retired as a partner in the Silicon Valley office of Simpson Thacher & Bartlett.

If an issuer is forced to file publicly, it has a 10-day exposure to the market while it waits to see if it needs to undergo a regulatory review, he noted, adding that under the new policy that window is narrowed to 48 hours. The new approach emulates one that has been successfully deployed for emerging growth companies under rule changes mandated by the Jumpstart Our Business Startups Act, Hinman told attendees.