Confidential IPO Filings with the SEC: Review and Public Disclosure

A confidential IPO filing with the SEC lets a company begin the registration process by submitting a draft registration statement for nonpublic staff review, keeping its financials, strategy, and business plans out of public view until shortly before the offering. Since July 10, 2017, this option has been available to any issuer. Before that, only Emerging Growth Companies could use it under the 2012 JOBS Act.¹

Two Pathways to Confidential Review

Companies reach confidential review through one of two routes, and the difference matters.

The first is statutory. Section 6(e) of the Securities Act gives any Emerging Growth Company the legal right to submit a draft registration statement for nonpublic review before its IPO. The statute also shields the submitted information from public records requests.²

The second is a Division of Corporation Finance policy that extends the same nonpublic review accommodation to all companies, including issuers too large to qualify as EGCs. A non-EGC using this pathway must include a cover letter confirming it will publicly file the registration statement and all prior nonpublic draft submissions at least 15 days before any roadshow, or 15 days before the requested effective date if there is no roadshow.³

Both pathways give a company the same practical benefit: the SEC reviews the filing privately. Only EGCs, however, layer additional reduced disclosure benefits on top of the confidential process.

Who Qualifies as an Emerging Growth Company

A company qualifies as an EGC if it had total annual gross revenues below $1.235 billion in its most recently completed fiscal year. That figure is the inflation-adjusted version of the original $1 billion threshold Congress set in 2012, updated every five years by the SEC.⁴

Once qualified, a company keeps EGC status until the earliest of four events:

Annual gross revenues reach $1.235 billion or more.
Five years pass since the company’s first public sale of common equity under an effective registration statement.
The company issues more than $1 billion in non-convertible debt over a three-year period.
The company becomes a large accelerated filer, which requires a public float of $700 million or more.⁵

A company that was an EGC when it first submitted its confidential filing but later loses that status can still finish the confidential review. The statute gives it a one-year grace period from the date it ceases to be an EGC, or until it consummates the IPO, whichever comes first.⁴

Disclosure Accommodations for EGCs

EGC status carries several reduced-disclosure benefits that apply whether or not the company files confidentially:

Only two fiscal years of audited financial statements, rather than three.
No auditor attestation of internal controls over financial reporting under Sarbanes-Oxley Section 404(b).
Less extensive narrative disclosure about executive compensation.
The option to defer compliance with certain new or revised accounting standards.
The ability to test the waters with qualified institutional buyers and institutional accredited investors before or after filing.⁶

Testing the waters was originally exclusive to EGCs under JOBS Act Section 5(d). In 2019, SEC Rule 163B extended the practice to all issuers, so any company pursuing a confidential IPO can now sound out institutional investors without triggering gun-jumping concerns.⁷ EGCs rely on the statutory protection of Section 5(d); non-EGCs rely on the Commission’s rule.

What Goes in the Draft Submission

The confidential submission follows the same format as a public filing. For most domestic IPOs, that is Form S-1, the standard registration form under the Securities Act.⁸ The cover page must be clearly labeled as a confidential draft submission.

The document covers the business, its operations and competitive position, and the risks it faces. It includes audited financial statements (two years for EGCs, three for other issuers), balance sheets, income statements, cash flow statements, and management’s discussion and analysis. Executive compensation, use of proceeds, risk factors, material legal proceedings, and beneficial ownership all appear in the narrative. Exhibits carry the articles of incorporation, bylaws, material contracts, and legal opinions.

The level of detail expected matches a public filing. The only difference is who reads it during review. Filings are submitted through EDGAR using the submission type “DRS” for draft registration statements, which keeps the document in the nonpublic portion of the database.⁹

How the SEC Reviews the Draft

Once filed, the draft is assigned to a review team in the Division of Corporation Finance, typically staff attorneys and accountants with industry experience. They check the filing against Regulation S-K (narrative disclosures) and Regulation S-X (financial statement rules).

The first comment letter generally arrives within about 30 days. Common areas of scrutiny include revenue recognition, related-party transactions, risk-factor specificity, and the valuation of stock-based compensation granted in the months before the IPO. The company responds by filing amended drafts through EDGAR, and the back-and-forth continues until the staff’s concerns are resolved.

For EGCs, the entire exchange remains nonpublic. For non-EGCs using the expanded accommodation, the initial draft receives nonpublic review, and the iterative process works similarly in practice.³ Working through SEC comments privately, without market participants reading each revision in real time, is the core practical value of confidential filing.

When the Filing Has to Go Public

The confidential period has a hard deadline. The company must publicly file its registration statement and all prior confidential submissions at least 15 days before the roadshow begins.² If there is no roadshow, the 15-day clock runs from the requested effective date instead.³

Everything then becomes public at once: the original draft, every amended version, all SEC comment letters, and the company’s responses. Analysts, journalists, competitors, and investors can review the full paper trail. The final public registration statement must reflect the refinements made during confidential review. Once the statement is declared effective, the company sets its final price and begins trading. Missing the 15-day window can delay the whole offering, so companies coordinate the transition closely with their underwriters.

Walking Away Without Disclosure

One of the strategically valuable features of confidential filing is that a company can abandon the process without anyone outside the SEC knowing. If market conditions turn, SEC feedback is unfavorable, or the business changes direction, the company can withdraw the filing privately. Because the submission was never public, no record appears on EDGAR.

The traditional public route works differently. An S-1 hits EDGAR the moment it is filed, and a subsequent withdrawal signals to the market that something went wrong. Confidential filing lets companies test the regulatory process without staking their reputation on an outcome they cannot yet predict.

What Confidential Filing Does Not Shield You From

Filing confidentially does not free a company to discuss its IPO in public. Section 5(c) of the Securities Act prohibits offering securities to the public before a registration statement has been filed, and a confidential draft submission does not count as a public filing.¹⁰ The company remains in the pre-filing period for the entire confidential review. Ordinary business communications about products, earnings, and operations continue, but statements designed to generate interest in the coming offering do not. The testing-the-waters exception applies only to qualified institutional buyers and institutional accredited investors, not to the general public or retail investors.⁷

Section 11 civil liability for material misstatements or omissions in a registration statement does not attach at the confidential draft stage. A confidential draft submission is not a “registration statement” within the meaning of Section 11, so the company and its officers face no Section 11 exposure until the filing becomes public and effective.¹¹ SEC staff will nonetheless compare later public versions against earlier confidential drafts, so care in the draft still matters.

Foreign Private Issuers

Foreign companies have a separate pathway administered by the Division of Corporation Finance that predates the JOBS Act. A foreign private issuer can submit its initial registration statement nonpublicly if it is listed or concurrently listing on a non-U.S. exchange, is being privatized by a foreign government, or can demonstrate that a public filing would conflict with foreign law. Foreign governments registering debt securities also qualify. Shell companies and issuers with no substantive business operations are excluded. A foreign private issuer that independently meets the EGC thresholds can instead use the EGC confidential filing process and receive the associated reduced disclosure benefits.¹²

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