The Securities and Exchange Commission (SEC) is exploring an expansion of the test-the-waters accommodation to all issuers, including investment company issuers.
Officials said the action would permit investor views about potential offerings to be taken into account at an earlier stage in the process than is the case today. The provision is currently only available to emerging growth companies or EGCs.
“Extending the test-the-waters reform to a broader range of issuers is designed to enhance their ability to conduct successful public securities offerings and lower their cost of capital, and ultimately to provide investors with more opportunities to invest in public companies,” SEC Chairman Jay Clayton said. “I have seen first-hand how the modernization reforms of the JOBS Act have helped companies and investors. The proposed rules would allow companies to more effectively consult with investors and better identify information that is important to them in advance of a public offering.”
The alteration would also enable prospective issuers to gauge market interest in a possible initial public offering or other proposed registered securities offering by permitting discussions with certain investors prior to the filing of a registration statement.
The proposal will have a 60-day public comment period following its publication in the Federal Register.