On March 3, 2025, the Division of Corporation Finance of the U.S. Securities and Exchange Commission (SEC) announced it was increasing the options available for companies to submit a draft review statement (DRS) for nonpublic review. With these enhanced accommodations, the SEC aims to facilitate capital formation by offering greater flexibility for a wider range of issuers and transactions.
The new accommodations expand the availability of the nonpublic review process for the initial registration of a class of securities under the Securities Exchange Act of 1934, as amended, to include both Section 12(b) and Section 12(g) registration statements on Forms 10, 20-F, or 40-F. In addition, the nonpublic review process will now be an option for a de-SPAC transaction when the SPAC is the surviving entity as long as the target is eligible to submit a draft registration statement.
Under the new accommodations, issuers will be permitted to submit draft registration statements regardless of how much time has passed since they became subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act. Issuers will also be allowed to omit the name of the underwriters from their initial draft registration statement submissions when otherwise required by Items 501 and 508 of Regulation S-K.
Key Highlights
- Forms 10, 20-F, or 40-F Eligible for DRS Filing. Private business development companies (BDCs) and private real estate investment trusts (REITs) with over 2,000 accredited investors can now have their Form 10 reviewed as a draft registration statement. This change allows these entities to benefit from the confidential review process, providing them with greater flexibility and privacy during the registration process.
- No Deadline for Submitting Subsequent DRS. Before the SEC’s enhanced accommodations, it only accepted subsequent draft registration statements submitted before the end of the 12-month period following the effective date of an issuer’s initial Securities Act of 1933, as amended, registration statement or an issuer’s Exchange Act Section 12(b) registration statement. The SEC will now accept for nonpublic review a subsequent draft registration statement for any offering under the Securities Act or registration of a class of securities under either Section 12(b) or Section 12(g) of the Exchange Act regardless of how much time has passed since the issuer became subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act.
Why It Matters
The ability to file Forms 10, 20-F, or 40-F in DRS mode offers private BDCs and REITs increased flexibility in managing their offering processes. This can be particularly beneficial for companies navigating complex regulatory requirements or seeking to maintain confidentiality during the early stages of their organization.
The nonpublic review process allows companies to address SEC comments and make necessary revisions to their registration statements without public scrutiny. Expanding this confidential process will help mitigate potential market reactions and provide companies with the opportunity to refine their disclosures before making them public.
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