Why was Bitmain able to submit its listing application secretly?

According to Tencent News’ Qianwang, a week before Wu Jihan launched this “coup” raid, Bitmain had secretly submitted an application for listing to the SEC, with Deutsche Bank as the sponsor. So why could it submit an application for listing secretly? How is it different from publicly submitting a prospectus?

Confidential submission emerged after Obama signed the Jumpstart Our Business Startups Act, or JOBS Act, in April 2012. The Act applies to emerging growth companies with annual revenue of less than $1 billion in the most recent fiscal year.

This means that such companies only need to submit a draft prospectus to the U.S. Securities and Exchange Commission, and do not need to issue a formal prospectus 15 days before holding a road show. The start of the road show means that companies preparing to go public need to promote the company to potential investors across the United States and around the world and invite them to participate in the company's initial public offering.

In June 2017, in order to activate the US IPO market, under the leadership of Jay Clayton, the chairman of the Securities and Exchange Commission appointed by the current President Trump, the policy of confidentially submitting IPO application documents was relaxed to all companies preparing to go public. This also means that all companies preparing to go public in the United States can choose to submit IPO application documents confidentially.

The benefits of this Act for companies planning to go public are:

1. Only the latest two years of audited financial statements need to be submitted, not three years.

2. The upper limit of the number of shareholders before listing is relaxed from 500 to 2,000, and the number of "unqualified" investors is relaxed to 500, making the difficulty of equity reform before the listing of enterprises easier, and relaxing the requirements for individual investors to subscribe.

3. After the S-1 form is submitted, the information is only disclosed to the U.S. Securities and Exchange Commission and specific investors. The public cannot see it until three weeks before the roadshow. This can protect the business information of the prospective listed company. The prospective listed company can inquire about prices from major investors without making its financial situation known to the public, and decide whether to go public after testing the waters.

4. Exempt from the constraints of SOX 404b, there is no need to establish internal control systems in accordance with the SOX Act before listing, but internal control systems can be established after listing.

The most disadvantageous aspect for the proposed listed company: a large number of investors can only see the financial information of the proposed listed company three weeks before the road show. They do not have time to do sufficient background checks and may be very cautious about the quotations made by the proposed listed company.