SEC Continues Renewal Project for Registered Capital Raises - Expanding Use of Draft Filings May Counter Abandonment of Public Securities Market

More than a decade has passed since the enactment of the Jumpstart Our Business Startups (JOBS) Act, which encouraged small-company capital formation through a reduction in costly regulatory burdens on SEC registrants. In response to the JOBS Act, the SEC streamlined the capital formation process for emerging growth companies by, among other things, making available to certain issuers the option to submit draft registration statements to the SEC for a “confidential, nonpublic staff review.” In 2017, the SEC greatly expanded the category of companies that were eligible for the nonpublic review process to include all issuers rather than only small companies. Building on these developments (and in support of the SEC’s renewed mission to facilitate capital formation), the SEC announced on March 3, 2025, that it would provide “enhanced accommodations” for the nonpublic review process.

The enhanced accommodations include:

1. Expanding the availability of the nonpublic review process for the initial registration of securities under sections 12(b) and 12(g) of the Securities Exchange Act of 1934 (Exchange Act) on Forms 10, 20-F, or 40-F.
2. Permitting issuers to submit draft registration statements regardless of how much time has passed since they became subject to the reporting requirements of section 13(a) or 15(d) of the Exchange Act.
3. Expanding the availability of the nonpublic review process for a "de-SPAC" transaction in situations in which the SPAC is the surviving entity.
4. Permitting issuers to omit the name of the underwriter(s) from their initial draft registration statement submissions, when otherwise required by Items 501 and 508 of Regulation S-K.

While the SEC indicated that issuers should take “all steps to ensure that a draft registration statement is substantially complete when submitted,” it also noted that it “will not delay processing if an issuer reasonably believes omitted financial information will not be required at the time the registration statement is publicly filed.”

These enhanced accommodations are likely to speed up the access to capital for companies both small and large.