Defining Issues  |  February 2019

SEC proposes to expand its 'test-the-waters' accommodations to all companies

KPMG reports on the SEC’s proposal to permit companies to communicate with potential investors prior to an offering. The proposal represents further expansion of the SEC’s modernization reform. 


Solicitation of Interest Prior to a Registered Public Offering

  • Companies contemplating a registered securities offering, including investment companies.

Relevant dates

Comments are due on or before April 29, 2019.

Key impacts

  • The proposal would create a new rule that is intended to promote capital formation
  • Proposed Rule 163B would permit a company, and any person authorized to act on its behalf, to engage in written or oral communications – otherwise known as 'test-the-waters communications' – with potential qualified investors 
  • The proposed rule would extend current accommodations available to EGCs
  • Companies subject to other regulations would need to consider whether any information communicated would be impacted by those regulations
  • The proposed rule would be non-exclusive and companies could also rely on other Securities Act communications rules or exemptions

Report Contents

  • Background
  • Proposed rule requirements
  • KPMG observation
  • Other investor safeguards
  • Non-exclusive election



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