This newsletter provides a snapshot of the principal US and selected international governance and securities law developments during the third quarter of 2017 that may be of interest to Latin American corporations and financial institutions.
US DEVELOPMENTS
SEC and NYSE/Nasdaq Developments
SEC Provides Additional Relief to Facilitate IPO Filings
On August 17, 2017, the SEC's Division of Corporation Finance issued guidance further extending an important accommodation provided to companies contemplating going public. Under the updated guidance, all issuers, including those that do not qualify as emerging growth companies (EGCs), would be permitted to omit from confidential draft registration statements interim financial statements and related financial information (including management discussion and analysis (MD&A) disclosure) that they reasonably believe will not be required to be included at the time the registration statement is publicly filed or, for EGCs only, at the time of the contemplated offering. The Division had previously provided this accommodation with respect to annual financial statements and related financial information. This accommodation does not extend to registration statements that are filed publicly on EDGAR. As a reminder, the submission of confidential draft registration statements prior to public filing is available for initial registrations and for follow-on registrations within 12 months of the effectiveness of the initial registration.
Under this guidance, a calendar year-end issuer that submits a confidential draft registration statement in November 2017 and reasonably believes it will first publicly file (or launch its offering, if an EGC) in April 2018 may omit its interim financial information for the nine months ended September 30, 2017 and 2016, along with omitting annual financial information for 2014 (and 2015, if an EGC). This is because none of the omitted financial information would be required at the time of its first public filing (or launch of its offering, if an EGC) in April 2018.
This announcement is the latest of what is expected to be a number of reforms and SEC staff ("Staff") policy changes designed to streamline the IPO process and enhance capital formation in public markets that SEC Chairman Jay Clayton has said is an important objective of the agency. This development is expected to allow companies to submit registration statements faster and reduce the cost of the registration process by eliminating the need for the preparation of financial statements and other financial information and auditor reviews of information that will ultimately not be included in a registration statement. Companies, however, should bear in mind that giving the Staff an opportunity to review recent MD&A disclosure and financial statements earlier in the registration process can also have benefits. Drawing out SEC questions and concerns at an earlier stage allows more time for such comments to be addressed. This can potentially prevent these comments from being raised later in the review process when they can have a real impact on transaction timing.
The SEC guidance is available at:
https://www.sec.gov/divisions/corpfin/guidance/safinterp.htm#20101.04
Our related client publication is available at:
http://www.shearman.com/en/newsinsights/publications/2017/08/sec-extends-ipo-accommodations
SEC Rules Requiring Exhibit Hyperlinking Take Effect
Starting September 1, 2017, new rules requiring hyperlinking of exhibits in SEC filings have taken effect. As discussed in our Q1 2017 Memorandum, the SEC adopted these rules in March in order to make access to exhibits in registration statements and periodic reports that were originally provided in previous filings easier for market participants to locate. As a reminder, the new rules apply to companies that file registration statements and periodic and current reports that are subject to the exhibit requirements under Item 601 of Regulation S-K, or that file on Forms F-10 or 20-F, but will not apply to Form 6-Ks.
The relevant SEC announcement of last March is available at:
https://www.sec.gov/news/pressrelease/2017-55.html
Our related client publication is available at:
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
