Seeking to Revitalize IPO Market, SEC Expands Popular JOBS Act Benefit to All Companies
The dramatic reduction in IPO activity over the last 15 years has been well documented and is “a serious issue for our markets and the country more generally,” according to Jay Clayton in his first public speech as SEC Chairman on July 12. In an effort to reverse this trend, the SEC has expanded a popular JOBS Act benefit to permit all companies, not just smaller companies known as “emerging growth companies,” to submit draft registration statements relating to IPOs for review on a non-public basis.
The new policy, which took effect on July 10, is intended to make it easier for private companies to go public by allowing them to “iron out any wrinkles in their financial reporting with the regulator privately” and to avoid “competitors getting an early peek at their figures,” according to a recent article in The New York Times. The new policy will also apply to most offerings made in the first year after a company has entered the public reporting system, according to the SEC press release and the related FAQs. “The non-public review process after the IPO reduces the potential for lengthy exposure to market fluctuations that can adversely affect the offering process and harm existing public shareholders,” according to the SEC.
For advice on whether your company could benefit from the new policy permitting submission of draft registration statements for non-public review, contact a member of Fredrikson & Byron’s Securities Group.