There’s good news for companies that want to go public: they can now file confidentially with the SEC. Previously, companies were required to disclose sensitive financial and business information publicly, which was not always advantageous due to the scrutiny the information received from investors and competitors. The new changes were effective as of July 10, and apply to any company attempting to go public. In this post, we will discuss the details of these changes, as well as how they could affect Blue Sky laws.
The bipartisan Jobs Acts passed under the Obama administration in 2013 allowed companies with under $1bn in revenue to file their registration statements confidentially, and up to as little as 15 days before an investor roadshow. The policy has since been extended to all companies attempting to go public by current SEC Chairman John Clayton (Trump’s appointee), to spur job growth. The pared down disclosure requirements allow companies to fix any issues in their filings before investors can scrutinize them, withdraw their filings if the market is volatile, and avoid releasing trade secrets. So far, 80% of companies going public have taken advantage of the new filing process, including Snap Inc. and Blue Apron.
While the IPO process is now simpler at the federal level, it remains to be seen how the SEC’s new changes will affect individual state Blue Sky laws. Blue sky laws are meant to protect investors, and each state has different requirements for disclosure. Some states may provide exemptions as long as federal requirements are satisfied, and some want to ensure all relevant information is disclosed to investors and that the offerings are fair. Therefore one could argue that having less time to review financial and business related information about an offering puts investors at a disadvantage, and it’s unclear how the SEC’s new filing process will affect investor protections at the state level.
While it’s easier than ever now to file to go public, companies must still comply with blue sky laws. At Blue Sky Filings, we take care of the entire blue sky filing process for you. If you need more information about Blue Sky Laws or to get assistance with your blue sky filings, please contact us at Blue Sky Filings by calling (844) 723-4537 or by filling out our online form.