SEC Expands Confidential Review Process for Draft Registration Statements

On March 3, 2025, the Securities and Exchange Commission (SEC) announced significant changes to its confidential review process for draft registration statements. These enhancements aim to provide greater flexibility to issuers seeking to go public or register securities, further facilitating capital formation while maintaining investor protections. The new rules build upon past expansions in 2017 and extend the benefits of confidential filing to a broader range of companies and transactions.

This article explores the background of these changes, the specific enhancements introduced by the SEC, and their implications for companies considering public offerings.

Background: The Evolution of Confidential Filings

The concept of confidential, nonpublic review of draft registration statements was first introduced under the Jumpstart Our Business Startups (JOBS) Act in 2012. This law allowed Emerging Growth Companies (EGCs)—businesses with annual revenue under a certain threshold—to submit draft IPO registration statements for SEC review before public disclosure.

In 2017, the SEC expanded this privilege to all issuers, enabling any company preparing for an IPO to engage in confidential discussions with the SEC before committing to a public filing. This change provided greater flexibility for issuers to test the market and address regulatory concerns without the pressure of public scrutiny.

Now, in 2025, the SEC is further broadening these accommodations, making confidential reviews even more accessible and removing several limitations that previously applied to issuers.

Key Changes in the Enhanced Accommodations

The SEC’s latest expansion of the confidential review process introduces four major changes:

1. Expanded Eligibility for Exchange Act Registration

Previously, issuers seeking to register a class of securities under the Securities Exchange Act of 1934 (Exchange Act) could only use the confidential review process if filing under Section 12(b) (for companies listing on a national securities exchange). The new rules extend this process to include Section 12(g) registration statements filed on Forms 10, 20-F, and 40-F, making it easier for companies registering securities outside of traditional exchange listings to engage in nonpublic review.

2. No Time Restrictions for Subsequent Offerings

Under previous SEC rules, issuers could only submit draft registration statements for subsequent offerings within 12 months of their initial Securities Act registration or Exchange Act registration under Section 12(b). The enhanced accommodations remove this restriction, allowing companies to file confidential draft statements at any time, regardless of how long they have been subject to SEC reporting requirements under Section 13(a) or 15(d) of the Exchange Act.

3. Enhanced Confidentiality for de-SPAC Transactions

With the rise of Special Purpose Acquisition Companies (SPACs), the SEC has introduced changes to facilitate confidential reviews in de-SPAC transactions where the SPAC remains the surviving entity. If the target company in a de-SPAC deal would otherwise be eligible to submit a draft registration statement, the SPAC-on-top structure can now take advantage of confidential review, aligning the process with traditional IPOs.

4. Omission of Underwriter Names in Initial Drafts

Issuers are now permitted to omit the name of underwriters from their initial draft registration statements, even when required under Items 501 and 508 of Regulation S-K. However, underwriters must be disclosed in subsequent filings. This change provides issuers with additional flexibility during the early stages of the registration process.

Benefits for International Companies

The SEC’s expanded accommodations provide several advantages for foreign private issuers (FPIs) and other international companies looking to access U.S. capital markets:

• Confidential Preparation for U.S. Listings: Foreign companies seeking to list on U.S. exchanges can now engage in confidential discussions with the SEC, allowing them to assess regulatory requirements before making a public commitment.
• Greater Flexibility for SPAC Mergers: Many international companies are acquired through SPAC transactions, and the new rules ensure that foreign targets in de-SPAC deals can utilize the confidential review process if they qualify.
• Extended Nonpublic Review for Secondary Offerings: Foreign companies that have previously registered with the SEC can now submit draft registration statements for secondary offerings or new securities registrations at any time, eliminating previous 12-month restrictions.
• Streamlined Filing for Different Jurisdictions: The ability to submit draft registration statements under Forms 10, 20-F, and 40-F benefits companies from various regulatory jurisdictions, including Canada, Europe, and Asia, seeking to list in the U.S.
• Reduced Disclosure Risk: International issuers can prepare their filings discreetly, mitigating potential market reactions and regulatory challenges in their home countries before publicly announcing their U.S. expansion plans.

Foreign companies should work with legal advisors and underwriters familiar with both SEC regulations and their home country’s regulatory framework to maximize the benefits of these enhanced accommodations.

Potential Risks and Considerations

While the SEC’s enhanced accommodations offer flexibility, issuers must be aware of the following potential risks:

• Regulatory Scrutiny: The SEC’s nonpublic review process does not exempt companies from compliance with SEC rules and regulations. Companies must ensure that all required disclosures are met when they transition to public filing.
• Investor Expectations: Even though initial filings remain confidential, investors and analysts will still scrutinize financials and business strategies once a public filing is made.
• Timelines for Public Filing: Issuers must still adhere to the SEC’s requirement that registration statements be publicly filed at least 15 days before a roadshow or effective date of the offering.
• Market Conditions: While confidential review allows issuers to delay their public filings, they must still be mindful of market conditions that could impact valuation or investor sentiment.

The SEC’s Stance on Investor Protection

While these enhancements prioritize capital formation and market efficiency, the SEC has reiterated its commitment to investor protection. The agency will continue to:

• Review draft registration statements with the same level of scrutiny as public filings.
• Require public disclosure of SEC comment letters and issuer responses within the prescribed timeframe.
• Monitor market practices under these expanded procedures and adjust the policy if needed.

The SEC’s expanded accommodations for draft registration statements mark a significant step in modernizing the public offering process. By extending confidential review to more issuers and transactions, the SEC is fostering a regulatory environment that supports capital formation while ensuring investor transparency.

For companies considering an IPO, de-SPAC transaction, or Exchange Act registration, these changes provide additional flexibility, confidentiality, and strategic advantages. Issuers and their advisors should carefully review these new accommodations and integrate them into their public offering plans to maximize their benefits.

Disclosure Statement

This article is for informational purposes only and does not constitute legal, financial, or investment advice. The views expressed herein are based on publicly available information and should not be relied upon for making business or investment decisions. Companies should consult with legal and financial professionals before engaging in any securities registration process. Chatsworth Securities does not assume any responsibility for the accuracy of the information provided and disclaims any liability for actions taken based on this content.