The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Thu, 30 Apr 2026 11:32:16 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.8 https://corpgov.law.harvard.edu/wp-content/uploads/2024/02/cropped-photography-4-e1706898544564-1-32x32.png SEC Expansion of “Testing-the-Waters” Communications to All Issuers – The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu 32 32 SEC Expansion of “Testing-the-Waters” Communications to All Issuers https://corpgov.law.harvard.edu/2019/10/04/sec-expansion-of-testing-the-waters-communications-to-all-issuers/?utm_source=rss&utm_medium=rss&utm_campaign=sec-expansion-of-testing-the-waters-communications-to-all-issuers https://corpgov.law.harvard.edu/2019/10/04/sec-expansion-of-testing-the-waters-communications-to-all-issuers/#comments Fri, 04 Oct 2019 13:01:07 +0000 https://corpgov.law.harvard.edu/?p=122969?d=20230208131927EST Posted by Michael Zeidel, Andrew J. Brady, and Ryan J. Adams, Skadden, Arps, Slate, Meagher & Flom LLP, on Friday, October 4, 2019
Editor's Note:

Michael Zeidel is partner,  Andrew Brady is of counsel, and Ryan Adams is an associate at Skadden, Arps, Slate, Meagher & Flom LLP. This post is based on a Skadden memorandum by Mr. Zeidel, Mr. Brady, Mr. Adams, Brian Breheny, Laura Kaufmann, and Michelle Gasaway.

On September 26, 2019, the Securities and Exchange Commission (SEC) adopted new Rule 163B and related amendments under the Securities Act to expand the permitted use of “testing-the-waters” communications to all companies regardless of size or reporting status, including business development companies (BDCs) and other registered investment companies. The new rule enables any issuer, including those that are not an emerging growth company (EGC) or any person authorized to act on the issuer’s behalf, to make oral and written offers to qualified institutional buyers (QIBs) [1] and institutional accredited investors (IAIs) [2] before or after the filing of a registration statement to gauge investors’ interest in an offering.

This new rule is a much-anticipated development that will level the playing field for issuers seeking to evaluate market interest prior to a registered public offering and represents an additional example of the SEC taking concerted action to encourage public capital formation.

The rule will become effective 60 days following its publication in the Federal Register.

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