In order to promote transparency and investor protection, the SEC’s Division of Corporation Finance announced on December 8 a change to its traditional policy with respect to the confidential non-public submission of initial registration statements by foreign private issuers. The longstanding policy was the reason that non-U.S. issuers generally were able to go public not long after they filed their registration statements.
Foreign companies were allowed to file their registrations confidentially with the SEC, and to go through several rounds of comments without publicly registering. By completing the rounds of comments before filing publicly, non-U.S. issuers usually spent very little time in registration before making their debuts.
New Policy: the staff will review initial registration statements of foreign issuers that are submitted on a non-public basis only where the registrant is a foreign government registering its debt securities, a foreign private issuer listed on a non-U.S. exchange, a foreign private issuer that is being privatized by a foreign government, or a foreign private issuer that can demonstrate that the public filing of an initial registration statement would conflict with the law of an applicable foreign jurisdiction. In addition, shell companies, blank check companies and issuers with no, or substantially no, business operations will not be permitted to use the non-public submission procedure.
The previous policy was partially based on the fact that, historically, the majority of foreign private issuers registering securities with the SEC were also having their securities traded on a foreign securities exchange, and the foreign market ordinarily did not have a practice of requiring public disclosure of the registration statement before completion of review. More recently, however, the vast majority of foreign private issuers using this non-public review procedure have not contemplated listing securities outside the U.S.
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