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Under the leadership of its new chairman, Jay Clayton, the SEC has made it clear in the past two years that it wants more companies to go public.
A new proposal, revealed today, could bring it closer to this goal. In particular, the agency offered to give any company exploring a potential IPO the opportunity to explore its projects in private with potential investors – institutional and accredited – before making a public decision.
This would expand the network to allow each company to "test the waters" before deciding whether to launch an offer, compared to companies that can test the waters today, which are "emerging growth companies".
As defined by the SEC, an emerging growth company is an issuer with a total annual gross sales of less than $ 1 billion in its most recently completed financial year.
The public now has 60 days to comment on the proposal, after which the SEC will decide to go ahead or not.
You can expect this to be the case. This decision follows a series of measures taken by the SEC to transfer part of the liquidity loss related to the private market to the public market. In July 2017, it allowed any company to confidentially submit registration documents for IPO sold shares, a benefit that only small businesses had previously benefited from.
Recognizing that companies can always choose to stay private longer, Clayton announced separately last August that the commission wanted to give more small investors access to more private companies for their retirement or other needs. He added that changes in this direction could occur "rather quickly", although the SEC has not yet formally announced a proposal.
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