“Test-the-Waters” Communications: SEC Adopts Rule Permitting All Issuers to Use “Test-the-Waters” CommunicationsSullivan & Cromwell LLP - September 27, 2019
On September 26, 2019, the SEC adopted its previously proposed new Rule 163B and related amendments to Rule 405 to expand the permitted use of “test-the-waters” or “TTW” communications to all companies. New Rule 163B permits all issuers, as well as persons authorized to act on their behalf, to assess market interest for a proposed registered offering by engaging in oral and written communications with qualified institutional buyers or institutional accredited investors prior to, or following, the filing of a registration statement. The new Rule represents a substantial expansion of the TTW provisions previously available only to emerging growth companies and permits all issuers to assess market demand for a registered offering on an entirely confidential basis. The Rule will become effective 60 days after publication in the Federal Register.