December 15, 2011

SEC Limits Availability of Non-Public Initial Review Process for Foreign Private Issuers

Registration statements filed by U.S. issuers are generally available immediately to the public through the SEC’s EDGAR system. Until recently, the SEC allowed most foreign private issuers1 registering securities with the SEC for the first time to submit their registration statements and related amendments on a confidential basis.

On December 8, 2011, the SEC announced that, effective immediately, it would only review submissions by foreign private issuers on a confidential basis in instances where:

  • a foreign government is registering its debt securities;
  • a foreign private issuer already has securities listed on, or is concurrently listing securities on, a non-U.S. securities exchange;
  • a foreign private issuer is being privatized by a foreign government; or
  • a foreign private issuer can demonstrate that the public filing of its initial registration statement would conflict with the law of an applicable foreign jurisdiction.

As a result, most non-U.S. companies submitting their initial registration statement to the SEC in connection with a U.S. IPO or listing will have to do so by filing it on the SEC’s EDGAR system, where the filing will be publicly available.

In addition, the non-public review process is no longer available to shell companies, blank check companies and issuers with no or substantially no business operations. The SEC also stated that under certain circumstances foreign issuers may be asked to publicly file their registration statements even if they fall within the general exceptions listed above. Examples of such circumstances include a competing bid in an acquisition transaction or publicity about a proposed offering or listing.

Foreign issuers that submitted a registration statement to the SEC on a confidential basis before December 8, 2011 will continue to benefit from confidential treatment of the filing, but any amendments to the registration statement will need to be filed publicly on the EDGAR system.

[1]  All non-U.S. issuers are foreign private issuers unless more than 50% of the issuer’s outstanding voting securities are owned of record by residents of the United States and any of the following three conditions is applicable:  (i) a majority of the executive officers or directors of the issuer are U.S. citizens or residents; (ii) more than 50% of the assets of the issuer are located in the United States; or (iii) the business of the issuer is administered principally in the United States.