TheCorporateCounsel.net

Last week, Corp Fin issued updated guidance on processing procedures for draft registration statements.  The new guidance clarifies how the IPO offering date will be determined & the ability of companies with registration statements on file to switch to the non-public review process for future amendments. Here’s the text of the new language:

The nonpublic review process is available for Securities Act registration statements prior to the issuer’s initial public offering date and for Securities Act registration statements within one year of the IPO. In identifying the initial public offering date, we will refer to Section 101(c) of the JOBS Act. The nonpublic review process is available for the initial registration of a class of securities under Exchange Act Section 12(b) on Form 10, 20-F or 40-F.

An issuer that has a registration statement on file and in process may switch to the nonpublic review process for future pre-effective amendments to its registration statement provided it is eligible to participate in the nonpublic review process and it agrees to publicly file its amended registration statement and all draft amendments in accordance with the time frame specified above.

Language was also added indicating that companies may submit eligibility questions to CFDraftPolicy@sec.gov. See this Gibson Dunn blog.

EGC Registration Statements: 3 New & Updated CDIs on Financial Info

At the same time, Corp Fin updated “FAST Act” CDI #1 addressing the financial information that ECGs may omit from draft & publicly-filed registration statements (new “Securities Act Forms” CDI 101.04 provides the same):

Question: What financial information may an Emerging Growth Company omit from its draft and publicly filed registration statements?

Answer: Under Section 71003 of the FAST Act, an Emerging Growth Company may omit from its filed registration statements annual and interim financial information that “relates to a historical period that the issuer reasonably believes will not be required to be included…at the time of the contemplated offering.” Interim financial information that will be included in a longer historical period relates to that period. Accordingly, interim financial information that will be included in a historical period that the issuer reasonably believes will be required to be included at the time of the contemplated offering may not be omitted from its filed registration statements. However, under staff policy, an Emerging Growth Company may omit from its draft registration statements interim financial information that it reasonably believes it will not be required to present separately at the time of the contemplated offering.

For example, consider a calendar year-end Emerging Growth Company 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. This issuer may omit from its draft registration statements its 2015 annual financial information and interim financial information related to 2016 and 2017. Assuming that this issuer were to first publicly file in April 2018 when its annual information for 2017 is required, it would not need to separately prepare or present interim information for 2016 and 2017. If this issuer were to file publicly 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 also Question 101.05 for guidance related to registration statements submitted or filed by non-EGCs.

New “Securities Act Forms” CDI 101.05 provides that non-EGCs may also omit annual & interim financial information that will not be required to be presented separately at the time of its first public filing.

Revenue Recognition: SEC Updates Guidance & Issues New SAB

On Friday, the SEC issued two interpretative releases & the Staff issued a Staff Accounting Bulletin updating guidance on revenue recognition – all related to FASB’s “ASC Topic 606 – Revenue from Contracts with Customers.” Here’s the press release (and Steve Quinlivan’s blog). This interpretive release addresses accounting for “bill and hold arrangements” – while the other release covers sales of vaccines to the federal government for certain stockpiling programs.

New SAB 116 is intended to bring existing guidance into conformity with ASC Topic 606.

– John Jenkins