Final Rules
We are adopting rules that will, as proposed, provide for the submission of non-public draft offering statements under Regulation A.274 In a change from the
proposal, however, the final rules do not require an issuer seeking non-public staff review of its draft offering statement to submit such draft pursuant to the Commission’s Rule 83. Instead, all such draft offering statements under Rule 252(a) shall receive non-public review. The final rules only permit issuers whose securities have not been previously sold pursuant to a qualified offering statement under Regulation A or an effective registration statement under the Securities Act to submit to the Commission a draft offering statement for non-public review. Consistent with the treatment of draft registration statements in registered offerings by emerging growth companies, a non- publicly submitted offering statement must be substantially complete upon submission in order for staff of the Division of Corporation Finance to begin its review. All non-public
271 Verrill Dana Letter 1.
272 McCarter & English Letter. The Proposing Release indicated that issuers seeking to non-publicly submit offering statements should submit such statements under cover of the Commission’s
Rule 83, 17 CFR 200.83, which deals with confidential treatment requests.
273 Milken Institute Letter (recommending that the Commission seek Congressional authority, if necessary, to protect these submissions from requests under the FOIA.
274 See Rule 252(d).
submissions of draft offering statements must be submitted via EDGAR, and the initial non-public submission, all non-public amendments thereto, and correspondence submitted by or on behalf of the issuer to the Commission staff regarding such submissions must be publicly filed and available on EDGAR as exhibits to the offering statement not less than 21 calendar days before qualification of the offering statement.
We do not believe, as was suggested by at least one commenter,275 that requiring
issuers to file only the qualified version of the offering statement and any earlier versions used in conjunction with solicitation materials would provide investors with sufficient disclosure to make informed investment decisions. Further, in light of the preemption of state securities laws registration requirements for Tier 2 offerings in the final rules,276 the 21 calendar day filing requirement will insure that state securities regulators are able to require first-time issuers that non-publicly submit draft offering statements to file such material with them for a minimum of 21 calendar days before any potential sales to investors in their respective states.277 Unlike emerging growth companies, the timing requirement for filing by issuers seeking qualification under Regulation A does not depend on whether or not the issuer conducts a road show or tests the waters in a contemplated offering before qualification.278
275 Verrill Dana Letter 1.
276 See discussion in Section II.H. below.
277 Notwithstanding the final rules that provide for the preemption of state securities laws’ registration and qualification requirements of Tier 2 offerings, state securities regulators retain, among other things, their authority to require the filing with them of any documents filed with the Commission. See, e.g., Section 18(c)(2) of the Securities Act. The timing of filing requirements at the state level, however, may reduce the time period in which an offering statement and related materials are on file with the state before Commission qualification.
278 See Section II.D. below for a discussion on the timing and requirements for the use of solicitation materials under Rule 255. Regulation A’s testing the waters provisions encompass a variety of activities, including, but not limited to, activities that could constitute a traditional road show.
Unlike Title I of the JOBS Act, Title IV does not provide for confidential submissions of offering statements under Regulation A.279 Consequently, the requirements of the FOIA are controlling on the scope of the Commission’s ability to adopt confidentiality rules for non-publicly submitted offering statements. We are therefore not adopting any specific additional rule or requirement for non-public submissions that would deem such submissions “confidential.” However, where an issuer seeks confidential treatment for non-publicly submitted offering materials, or any portion thereof, for which it believes an exemption from the FOIA exists, it should continue to do so in compliance with the Commission’s Rule 83.280
While non-publicly submitted offering statements must be submitted
electronically on EDGAR, the Commission and its staff will not make such offering statements publicly available on EDGAR as a matter of course.281 The treatment of non- public submissions in this regard is consistent with the Commission staff’s approach to the public availability of draft registration statements submitted by foreign private issuers for registered offerings.282 As there is no statutory basis for withholding non-public submissions from production, absent an exemption from the FOIA,283 issuers that rely on our provisions for non-public submission should be aware that the Commission may, under certain circumstances, be compelled to provide such materials to a requesting party
279 See fn. 267 above.
280 See 17 CFR 200.83. Where an issuer seeks confidential treatment of any information included in a publicly filed offering statement or related materials, it should do so in compliance with Securities Act Rule 406. See 17 CFR 230.406. See Rule 251(e) (confidential treatment).
281 This is in contrast to publicly filed draft and final offering statements that will be made automatically available on EDGAR at the time of filing.
282 See Non-Public Submissions from Foreign Private Issuers, available at: http://www.sec.gov/divisions/corpfin/internatl/nonpublicsubmissions.htm.
283 See 5 U.S.C. 552.
(or to otherwise make them publicly available) before the date on which an issuer would otherwise have been required to publicly file on EDGAR.
Form and Content
Section 3(b)(2)(G)(i) of the Securities Act identifies certain disclosure requirements that the Commission may require for offerings relying on the Regulation A exemption. The requirements largely coincide with the existing offering statement disclosure requirements of Form 1-A, such as financial statements,284 a description of the issuer’s business operations,285 financial condition,286 and use of investor funds.287 The proposed rules, comments received on the proposed rules, and the final rules being adopted today for each of Part I, II, and III of Form 1-A are discussed in detail below.