The SEC will soon implement an EDGAR-based electronic system allowing for emerging growth companies (as defined under the JOBS Act) to request confidential, non-public review of registration statements prior to public filing.  There are several situations in which this sort of confidential non-public review – a “test-run” of sorts with the SEC to resolve any problems – is available to issuers.

One of those situations involves foreign private issuers and foreign governments.  The SEC has a policy of allowing a certain subset of foreign private issuers and foreign governments to submit registration statements and amendments to SEC staff for review on a non-public, confidential basis in recognition that foreign issuers and foreign governments desiring to make public offerings or to be listed on U.S. exchanges often face “unique circumstances.”

A second situation involving confidential non-public review relates to “emerging growth companies” and was brought into existence by the JOBS Act.  Companies that qualify as “emerging growth companies” under the JOBS Act are eligible to submit registration statements to the SEC for confidential, non-public review prior to public filing, although this program has a basis in statute, as opposed to the SEC’s non-statutory policy regarding certain foreign issuers and foreign governments.

An emerging growth company (EGC) under the JOBS Act is a company that has total gross revenues of less than $1 billion at the end of its most recently completed fiscal year and has not conducted a registered IPO of its common stock on or prior to December 8, 2011.  An EGC can maintain its special status for up to five years, although EGC status will terminate prior to the expiration of the five year period if (i) total annual gross revenue exceeds $1 billion, (ii) the worldwide public float exceeds $700 million as of the end of the second quarter following the anniversary of the EGC’s IPO or initial reporting, or (iii) the EGC’s issues more than $1 billion in non-convertible debt in any consecutive three-year period.

The SEC began with a paper-based confidential submission system that was replaced on May 14, 2012 by a secure e-mail submission system.  The SEC has now announced that the secure e-mail system will be replaced with an EDGAR-based system  for confidential non-public submission of draft registration statements, which will presumably make the submission process more convenient for issuers.  Some features of this new system will be available July 2, 2012, with the next scheduled EDGAR update, and the full system is expected to be available in the near future.

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