United States

Solicitations of interest prior to a registered public offering


The SEC recently issued Final Rule 33-10699, Solicitations of Interest Prior to a Registered Public Offering, which enables all issuers to engage in “test-the-waters” communications with certain institutional investors regarding a contemplated registered securities offering prior to, or following, the filing of a registration statement related to such offering. The rule and related amendments expands the "test-the-waters" accommodation, which previously only was available to emerging growth companies, to all issuers, including fund issuers. 

The “test-the-waters” communications are exempt from restrictions imposed by Section 5 of the Securities Act of 1933 on written and oral offers prior to or after filing a registration statement and are limited to qualified institutional buyers (QIBs) and institutional accredited investors (IAIs). Securities Act Rule 163B permits any issuer, or any person authorized to act on its behalf, to engage in oral or written communications with potential investors that are, or are reasonably believed to be, QIBs or IAIs, either prior to or following the filing of a registration statement, to determine whether such investors might have an interest in a contemplated registered securities offering. 

The Final Rule will be effective 60 days after its publication in the Federal Register.