SEC’s New Confidential Filing Rules Give Companies More Control

Letting companies submit draft registration statements to the Securities and Exchange Commission for confidential review is a welcome step. It could level the playing field for companies seeking to raise capital or expand through acquisitions.

Confidential filings allow companies to defer—or avoid, if they don’t proceed with an offering—the public disclosure of sensitive commercial and financial information to the market and to competitors while they wade through the SEC review and comment process and await favorable market conditions.

The ability to confidentially file with the SEC is especially important now, given recent tumultuous market conditions that often force companies to delay or even abandon their plans.

SEC staff on March 3 announced it would permit confidential submissions not just for initial public offerings, but also for more follow-on offerings (after a company has gone public) and original exchange listings, including spin-offs and secondary listings by foreign companies.

This move reflects a broader shift by acting SEC commissioner Mark Uyeda to refocus the agency on its core mission: supporting capital formation while protecting investors and maintaining fair, efficient markets.

Smaller public companies, especially life sciences companies that need to raise capital often, will welcome the new accommodation.

Emerging growth companies (generally those with annual revenues below $1.2 billion) and companies conducting offerings within one year of an initial public offering, were able to confidentially file with the SEC since 2012. Now, companies may submit draft registration statements for any public offering, not just IPOs or follow-on offerings within a year of the IPO.

The changes also will help them compete with larger companies that qualify as well-known seasoned issuers, or WKSIs, that generally have public floats of more than $700 million. WKSIs can file registration statements that aren’t subject to SEC pre-clearance and can be used immediately. This ability allows WKSIs not to make any public filings until they’re ready to go to market and market conditions appear favorable.

The new accommodation brings smaller companies some, but not all, of the benefits enjoyed by WKSIs. For non-WKSIs, confidential submissions are limited to the initial filing and they must make a public filing at least two business days before the effective date of the registration statement.

If the SEC reviews and comments on the filing, non-WKSIs can be held in SEC purgatory for weeks, even months, while responding to successive rounds of SEC comments.

One other accommodation that will help companies raise capital is the ability to omit the names of the underwriters from initial submissions. Companies may now start the registration process before committing to one or a group of underwriters.

The change more likely will help public companies that rely on existing disclosures than companies contemplating IPOs, because the input of the underwriters and their counsel into both the marketing and disclosure aspects of IPO registration statements is important.

The new accommodation also applies to some merger and acquisition transactions. For example, companies issuing stock in business combination transactions may now confidentially submit the initial draft of their registration statements—as long as they publicly file the registration statement at least two business days before the statement’s effective date.

While most acquirers will likely use the new accommodation, it will be less helpful for business combinations, because the market is already expecting the filing, and much of the information may already be public.

For transactions in which a business is combining with a special purpose acquisition company, the first SEC filing may now be submitted confidentially, as long as the target otherwise would be independently eligible to submit a draft registration statement confidentially. This may be useful when the parties are still negotiating financing or other arrangements but want to start the SEC process.

The final area where the SEC has offered some assistance is for companies seeking an exchange listing or that otherwise become subject to ongoing SEC reporting.

Some companies seek to list securities outside of the context of an IPO, such as in connection with a spin-off or a foreign public company seeking a US secondary listing. Companies that have over a minimum number of shareholders and assets become subject to the SEC’s ongoing reporting obligations, even without an exchange listing.

While the ability to submit a registration statement confidentially is helpful in these contexts, it is not likely to have a significant effect on the overall capital markets, because there are relatively few non-IPO related exchange listings each year (less than 50 were filed in 2024) and the filing of an ongoing reporting registration statement is not voluntary.

Just as confidential IPO filings have become common practice, these expanded accommodations are likely to see widespread adoption—especially in uncertain market conditions. They offer public companies more control over timing and strategy while maintaining transparency at the appropriate stages.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Jennifer Carlson is partner at Willkie and member of its corporate and financial services department and capital markets practice.

Edward Best is partner at Willkie and co-chairs the firm’s capital markets practice.

John Ablan and Susan Rabinowitz contributed to this article.

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