Confidential Submission of Registration Statements In Going Public Transactions
The Jumpstart Our Business Startups Act (the “JOBS Act”) allows an “emerging growth company” to submit a draft of its Form S-1 registration statement and exhibits to the Securities and Exchange Commission (the “SEC”) on a confidential basis. This allows private companies in going public transaction to ease into public company status. This blog post addresses the common questions we receive about emerging growth companies during the going public process.
Q. When does an emerging growth company have to file its registration statement if I want it to be a confidential submission?
A. The JOBS Act requires that emerging growth companies who want to file a confidential submission of theirregistration statement do so within 21 days prior to the registration
statement’s anticipated effectiveness.
Q. How long will my company’s registration statement remain confidential?
A. Registration statements on Form S-1 submitted on a confidential basis do not remain confidential if a company completes its Direct Public Offering, Initial Public Offering (“IPO”) or pre-IPO offering.
Q. Will SEC comment letters to a registration statement and company responses to the registration statement remain confidential?
A. Form S-1 registration statement comments and responses will become publicly available after the completion of the securities offering but not earlier than 20 business days following the effective date of the registration statement.
Q. What are the benefits of confidential submission of a registration statement to the SEC?
A. The confidential submission of a Form S-1 registration statement allows a company to keep the registration statement confidential and out of the public domain until it decides whether it will proceed with its public offering. If a company abandons its offering before its registration statement becomes effective, its submission remains confidential.
Q. If I submit my company’s registration statement on a confidential basis can the company still announce its registration statement or IPO?
A. SEC Rule 135 allows an issuer to announce limited information about the confidential submission of a registered securities offering submitted to the SEC.
Q. Does anything contained within a confidentially submitted Form S-1 registration statement remain confidential?
A. Limited information from the confidential submission of a registration statement can remain confidential. Rule 406 allows a company to keep portions of its registration statement confidential. Rule 406 requires the issuer to state the specific reasons why a confidential request is made and provide a detailed explanation of why, based on the related facts and circumstances, disclosure of the information is unnecessary to protect investors. The most common request for confidential submission of certain information in Form S-1 registration statements is made for trade secrets, proprietary information, confidential commercial or financial information that would cause substantial competitive harm to the issuer if disclosed.