Last week, the SEC’s Division of Corporation Finance issued updated guidance on processing procedures for draft registration statements. Below is a FAQ summary table we have prepared related to this new guidance.

There are some nuances in the guidance, so please consult with outside securities counsel before omitting any financial statements in your filing. Contact any member of our Corporate & Securities practice for more information.

FAQ

Emerging Growth Companies (EGCs)

Non-EGC

Do we have the ability to confidentially submit a draft registration statement(s) in connection with our IPO or within 12 months of the effective date of the IPO registration statement?
Yes. See Section 71003 of the FAST Act and updated Corp Fin policy. Yes. See updated Corp Fin policy.
What standard should we use when determining whether financial information can be excluded?
Financial information that the issuer reasonably believes will not be required to be included at the time of the contemplated offering. See Section 71003 of the FAST Act.

Financial information that the issuer reasonably believes will not be required at the time the registration statement is publicly filed. See updated Corp Fin policy.

**Note, unlike EGCs which relates to the contemplated offering and not whether the filing is public or confidential, the Corp Fin Staff policy relates only to accommodations prior to the public filing.

What is the deadline for publicly filing my registration statement?
15 days prior to any road show or, in the absence of a road show, at least 15 days prior to the requested effective date of the registration statement. See 71003 of the FAST Act and Question 9 of the Corp Fin JOBS Act FAQs. Same as EGCs. See updated Corp Fin policy.
What annual and interim financial information may be excluded from the registration statement?

Annual: Annual financials that the issuer reasonably believes will not be included at the time of the contemplated offering (i.e., road show).

Interim: Per the Corp Fin Staff policy, interim financial information may be omitted from non-public registration statements to the extent the issuer reasonably believes it will not be required to present separately at the time of the contemplated offering.

See Section 71003 of the FAST Act and Question 1 of the FAST Act Interpretations.

Annual and interim: Annual and interim financial information that the issuer reasonably believes will not be required to present separately at the time it files its registration statement publicly. (The issuer may not omit any required financial information from its publicly filed registration statements.)

See CD&I 101.05 of the Securities Act Forms.

What is an example of the financial statement policy?
Consider a calendar year-end EGC that submits a draft registration statement in November 2017 and reasonably believes it will commence its offering in April 2018 when annual financial information for 2017 will be required:

  • Assuming that this issuer were to first publicly file in April 2018 when its annual information for 2017 is required, the EGC may omit from its draft registration statements its 2015 annual financial information and interim financial information related to 2016 and 2017.
  • However, if this issuer were to first publicly file in January 2018, it may omit its 2015 annual financial information, but it must include its 2016 and 2017 interim financial information in that January filing because that interim information relates to historical periods that will be included at the time of the public offering.

See Section 71003 of the FAST Act and Question 1 of the FAST Act Interpretations.

Consider a calendar year-end non-EGC that submits a draft registration statement in November 2017 and reasonably believes it will first publicly file in April 2018 when annual financial information for 2017 will be required:

  • This issuer may omit from its draft registration statements its 2014 annual financial information and interim financial information related to 2016 and 2017 because this information would not be required at the time of its first public filing in April 2018.
  • However, if this issuer were to first publicly file in January 2018, it would need to include annual information for 2014, 2015 and 2016, as well as interim information for 2016 and 2017. (As previously noted, unlike EGCs which relates to the contemplated offering and not whether the filing is public or confidential, the Corp Fin Staff policy relates only to accommodations prior to the public filing.)

See CD&I 101.05 of the Securities Act Forms.

Can we omit financial statements of other entities from our filing or submission?

Yes, if the EGC reasonably believes that those financial statements will not be required at the time of the contemplated offering.

Section 71003 of the FAST Act is not by its terms limited to financial statements of the issuer. Thus, the issuer could omit financial statements of, for example, an acquired business required by Rule 3-05 of Regulation S-X if the issuer reasonably believes those financial statements will not be required at the time of the offering. This situation could occur when an issuer updates its registration statement to include its 2015 annual financial statements prior to the offering and, after that update, the acquired business has been part of the issuer’s financial statements for a sufficient amount of time to obviate the need for separate financial statements. See Question 2 of the FAST Act Interpretations.

Yes, if the non-EGC reasonably believes that those financial statements will not be required at the time of the public filing.

See updated Corp Fin policy and based on informal Staff guidance.

Does the FAST Act and updated Corp Fin policy regarding the omission of certain financials also apply to pro forma financials under Article 11 of Regulation S-X?
Yes Yes