This alert summarizes the proposals, highlights key mechanical and structural changes, and identifies practical considerations that public companies, boards, and counsel should begin evaluating now.
Background
The SEC’s registered offering framework has historically limited access to short-form registration and shelf offerings based in part on seasoning, reporting history, public float, and, for WKSIs, public float or registered debt thresholds. The new proposal would represent a significant departure from that historical approach by eliminating the Form S-3 one-year seasoning requirement and the Form S-3 transaction requirements (including the $75 million public float requirement for unlimited primary offerings on Form S-3) for issuers that otherwise satisfy the proposed registrant requirements. The proposal would also exclude specified issuer categories such as FPIs, asset-backed issuers, investment companies, and business development companies (BDCs) from Form S-3.
The Commission’s stated rationale reflects both capital formation policy and market developments. The registered offering proposal emphasizes that registered offerings provide investors with disclosure and liability protections that are not available in exempt offerings, while also noting that EDGAR and electronic dissemination have made issuer information broadly available in ways that did not exist when short-form registration eligibility standards were first developed.
The reporting proposal similarly reflects a deregulatory and simplification theme. The current framework includes overlapping large accelerated filer, accelerated filer, non-accelerated filer, smaller reporting company, and emerging growth company categories. The proposed amendments would largely replace that framework with two principal categories—large accelerated filers and non-accelerated filers—plus a new small non-accelerated filer subcategory.
The SEC estimates that, if the proposed amendments were in place today, over 80% of public companies would qualify as non-accelerated filers. The SEC also estimates that large accelerated filers under the proposed framework would represent approximately 93.5 percent of total market public float and that the proposal could result in an increase of over 60 percent in the number of issuers eligible to use Form S-3.
Key Elements of the Registered Offering Proposal
- Expanded Form S-3 eligibility. The proposal would revise Form S-3 eligibility by removing the requirement that issuers have been subject to Exchange Act reporting for 12 months before using the form and by eliminating the form’s transaction requirements, including the “baby shelf” limitations—the instruction that currently requires at least $75 million in public float to register an unlimited amount of securities on Form S-3. The proposal would further provide that Form S-3 eligibility no longer be conditioned on an issuer satisfying the “Certain Failures to Make Payments and Defaults” and the issuer having filed all required electronic filings requirements. Form S-3 would continue to require current and timely Exchange Act reporting, prohibit the use of Form S-3 by certain ineligible issuers, and separately prohibit use of Form S-3 by FPIs, asset-backed issuers, investment companies, and BDCs. As proposed, any Exchange Act reporting company that is current and timely in its filings would generally be eligible to use Form S-3, unless it is an “ineligible issuer” as further discussed below.
- Impact of late filing on continued S-3 eligibility. The proposal would provide that an issuer retain Form S-3 eligibility notwithstanding if there was a late filing during the relevant lookback period, provided that: (a) the filing was made within seven calendar days of the original due date (or if the seventh calendar day falls on a weekend or holiday, the first business day thereafter) and (b) the issuer made only one late filing during the relevant lookback period. Where Rule 12b-25 applies but the issuer is unable to file during the prescribed extension period, the seven-day period would be calculated from the original due date and not from the end of the extended period provided under Rule 12b-25. Issuers must still assess whether the registration statement and prospectus contained all required information and included all additional material information necessary to make the required statements not misleading, and be mindful of liability concerns under the federal securities laws, including under Sections 11, 12(a)(2), and 17(a) under the Securities Act of 1933, as amended (the “Securities Act”).
- Ineligible issuer categories. The proposed Form S-3 restrictions would disqualify certain “ineligible issuers,” including: (a) blank check companies as defined in Rule 419(a)(2); (b) a shell company, other than a business combination related shell company, each as defined in Rule 405 (provided that an issuer, other than an FPI, would not be deemed a shell company solely because during the prior three years, either the issuer or any predecessor entity was a special purpose acquisition company (SPAC) as defined in Item 1601 of Regulation S-K); and (c) a penny stock issuer as defined in Rule 3a51-1. (Collectively, such blank check, shell, and penny stock companies are referred to as “BSP” issuers.) The proposal would also continue to treat persons subject to certain securities-related criminal convictions, antifraud orders, stop orders, and related proceedings as ineligible issuers.[1]Because Form S-3 eligibility is the gateway to eligible listed issuer (ELI) and seasoned eligible listed issuer (SELI) status, these restrictions also would limit access to the proposed enhanced registration and communication accommodations.
- Shelf offerings and ATMs. Currently, under Rule 415(a)(4), issuers must be S-3 (or Form F-3 and Form N-2) eligible to register a primary at-the-market (ATM) offering. Expanded Form S-3 eligibility would thus increase the number of issuers able to conduct primary ATM offerings. The proposal would also amend Rule 415(a)(4) to limit ATM offerings to securities listed and traded on a national securities exchange or traded in a market designated by the Commission, with the SEC noting that OTCQX Best Market tier and the OTCQB Venture Market tier would be expected to continue to qualify based on their current criteria.[2]
- New Eligible Issuer Categories. The proposed rules would establish two new categories of issuers—the Eligible Listed Issuer (ELI) and the Seasoned Eligible Listed Issuer (SELI)—and eliminate the WKSI definition as it relates to all issuers other than FPIs. An ELI is an issuer that meets Form S-3’s proposed registrant requirements with at least one class of common equity listed on a national securities exchange. A SELI is an ELI that has been subject to the Exchange Act’s reporting requirements for at least 12 calendar months and any portion of a month immediately preceding the relevant measurement date. (For example, an issuer that became subject to Exchange Act reporting requirements on July 19, 2025, would meet the seasoning requirement for purposes of SELI determination on August 1, 2026.)
The determination date for ELI or SELI qualification would be the latest of:
-The date the issuer files a Form S-3 registration statement;
-The date of the most recent amendment to a Form S-3 made to comply with Section 10(a)(3)[3]of the Securities Act (or if such amendment has not been made within the time period required by Section 10(a)(3), the date on which such amendment is required); or
-If the issuer has not filed or amended a registration statement to comply with Section 10(a)(3) for 16 months, the date of filing its most recent annual report on Form 10-K or Form 20-F (or if such report has not been filed by its due date, such due date).
As eligibility would be determined on the dates specified above, under the proposal, an issuer would remain eligible to use the expanded registration and communication benefits even if it loses ELI or SELI status between determination dates. Issuers that are not Form S-3 eligible would not be eligible for the expanded registration and communication benefits. (WKSI FPIs would remain eligible for these benefits even though they would not be permitted to use Form S-3.)
- Enhanced registration and communication benefits. Many benefits currently associated with WKSI status[4]would become available to broader groups of domestic issuers, with additional benefits based on whether the issuer is Form S-3 eligible, an ELI or SELI. Specifically:
-All Form S-3 eligible issuers would be eligible for Rule 139 (ability of broker-dealers to publish issuer-specific research reports), Rule 430B(b) (ability to omit identity of selling securityholders and amounts of securities to be registered on their behalf), and Rule 433 (ability to use a FWP without it being preceded or accompanied by a prospectus).
-ELIs would also be eligible for Rules 163, 163A, 164, 413, 430B(a), 456(b), and 457(r), including pre-filing offer flexibility, post-filing FWP flexibility, the ability to add securities or classes of securities, increased flexibility to omit certain information from a base prospectus, and pay-as-you-go filing fees.
-SELIs would receive all Form S-3 eligible issuer and ELI benefits and would be the only domestic issuer tier eligible for automatic shelf registration under Rule 462.
These tiers would be cumulative: ELIs would receive the benefits available to all Form S-3 eligible issuers, and SELIs would receive the benefits available to both lower tiers plus automatic shelf registration. In addition, the proposal would permit majority-owned subsidiaries of ELIs and SELIs to take advantage of the enhanced registration and communication benefits even if they do not independently qualify as ELIs or SELIs. Specifically, a majority-owned subsidiary of an ELI or SELI would be treated based on its parent’s status if the subsidiary and parent are co-registrants on the same registration statement and the subsidiary is not an ineligible issuer or a prohibited issuer (FPI, asset-backed issuer, investment company, or BDC). Majority-owned subsidiaries would not need to be subject to or meet the current and timely Exchange Act reporting requirements.
- Form S-1 incorporation by reference. The proposal would modernize Form S-1 by allowing issuers that meet the relevant Form S-1 incorporation-by-reference requirements to “backward” incorporate by reference regardless of whether they have filed an annual report for the most recently completed fiscal year and to “forward” incorporate by reference regardless of whether they are smaller reporting companies. The proposal would continue to require issuers to be current in their Exchange Act reports and disallow BDCs from incorporating by reference. The proposal also would amend Form S-1 to prohibit use by FPIs, investment companies, and BDCs.[5]In addition, Item 11A of Form S-1 would be amended to require an issuer to disclose all material changes which have occurred after the end of the most recent fiscal year covered by the financial statements required to be included in the Form S-1 and that have not been disclosed in a Form 10-Q or Form 8-K. Item 12(a)(1) would be amended to require an issuer to incorporate by reference a Form 10-K that contains the financial statements for the most recently completed fiscal year or if no Form 10-K has been issued, to incorporate by reference to a Securities Act or Exchange Act filing that contains Form 10 information. Item 12(b) would be amended to provide that any issuer that is permitted to backward incorporate by reference to be permitted to forward incorporate by reference.
- Federal preemption of state securities registration and qualification requirements. The proposal would preempt state securities law and registration requirements with respect to any offering securities registered under the Securities Act. Specifically, the proposal would add the term “qualified purchaser” to Rule 146 and for purposes of Section 18(b)(3), define such term to include “any person to whom securities are offered or sold pursuant to an offering registered under the Securities Act.” As a result, these securities would be “covered securities” under Section 18(a) of the Securities Act and therefore be exempt from state securities law registration and qualification requirements. This would extend preemption beyond the current framework, which generally covers registered offerings of exchange-listed securities and registered investment company securities but not all registered offerings of unlisted securities.
- BDCs, registered closed-end funds, and insurance products. The proposal would expand short-form Form N-2 eligibility and related offering flexibilities for a broader group of exchange-listed business development companies and registered closed-end funds, while also amending Rule 482 to permit broad-based advertising for registered index-linked annuities and registered market value adjustment annuities under specified conditions.
- Other amendments. The proposal would revise Rule 473 so that registration statements that are not otherwise automatically effective would be deemed delayed unless the issuer affirmatively includes a legend stating that the registration statement is to become effective under Securities Act Section 8(a), reducing the risk of inadvertent effectiveness and eliminating the need for the traditional delaying amendment. The proposal would also include technical and conforming amendments to Forms S-1 and S-3 and related rules to implement the proposed changes.
Key Elements of the Reporting Proposal
- Two principal filer categories. The proposal would eliminate accelerated filer and smaller reporting company as separate filer status categories and would define non-accelerated filer to mean any issuer that is not a large accelerated filer. Emerging growth company status would remain because it is statutory, but the proposal would extend many accommodations currently associated with SRCs and EGCs to non-accelerated filers.
- Large accelerated filer threshold. The proposal would raise the public float threshold for large accelerated filer status from $700 million to $2 billion. A company would need to have been subject to Exchange Act reporting for at least 60 consecutive calendar months and to meet the $2 billion public float threshold for two consecutive fiscal years before becoming a large accelerated filer, with public float measured using the average trading price over the last 10 trading days of the second fiscal quarter multiplied by shares held by non-affiliates as of the last day of that quarter.
- Scaled disclosure and governance accommodations for non-accelerated filers. Non-accelerated filers would be able to use many accommodations currently available to SRCs and EGCs, including 1) scaled financial statement disclosure (two versus three years, including for corresponding MD&A disclosure) and 2) scaled executive compensation disclosure (two instead of three years of summary compensation table information; executive compensation disclosure for three instead of five named executive officers).
In addition, there would be no mandatory inclusion of the following:
-Risk factor disclosure on Forms 10-K and 10-Q;
-Performance graph disclosure (except for investment companies);
-Supplementary financial information pursuant to Item 302 of Regulation S-K;
-Quantitative and qualitative disclosures about market risk;
-Compensation-related disclosures (including CD&A, compensation policies and practices related to risk management, pay ratio disclosure, certain executive compensation disclosure tables for grants of plan-based awards, pension benefits, option exercises and stock vested, and nonqualified deferred compensation);
-Disclosures related to policies and procedures for related party transaction;
-Compensation committee interlocks and insider participation;
-Compensation committee reports;
-Audit committee financial expert disclosure in the issuer’s first annual report;
-Pay-versus-performance disclosure;
-Say-on-pay or say-when-on-pay shareholder advisory votes; or
-ICFR auditor attestation requirement.
- ICFR auditor attestation. Under the proposal, only large accelerated filers would be required to provide an auditor attestation report on ICFR. Non-accelerated filers would still be required to provide management’s assessment of ICFR, and the SEC noted that companies could voluntarily obtain an auditor attestation if they conclude that doing so would be beneficial.
- Small non-accelerated filers. The proposal would create a new small non-accelerated filer subcategory for non-accelerated filers with total assets of $35 million or less as of the end of each of their two most recent second fiscal quarters. Small non-accelerated filers would have 120 days after fiscal year-end to file Form 10-K and 50 days after quarter-end to file Form 10-Q, compared to 90 days and 45 days for other non-accelerated filers.
- Unresolved SEC staff comments. The reporting proposal would require all registrants to disclose in Form 10-K or Form 20-F the substance of material unresolved SEC staff comments on Exchange Act periodic or current reports that were received at least 180 days before fiscal year-end and remain unresolved.
- Foreign private issuers and asset-backed issuers. The reporting proposal would not apply the large accelerated filer and non-accelerated filer definitions to FPIs that use foreign private issuer forms, and asset-backed issuers would be excluded from the filer status definitions. The SEC separately proposed to continue requiring FPIs filing on Form 20-F or Form 40-F to provide ICFR auditor attestation as they do today, beginning at the current $75 million public float threshold, unless they qualify as emerging growth companies. In the registered offering proposal, the SEC also proposed to prohibit FPIs from using Forms S-1 and S-3, while noting that FPIs would continue to be able to use Forms F-1 and F-3 as applicable.
Practical Takeaways for Public Companies
- Reassess shelf eligibility and capital markets strategy. Companies that currently rely on Form S-1, are subject to the baby shelf limitation, or are not currently eligible for automatic shelf registration should evaluate whether the proposal would materially change their ability to file a shelf registration statement or utilize an effective shelf registration statement, execute shelf takedowns, or conduct ATM programs. In particular, new IPO issuers who historically have had difficulty raising capital quickly and efficiently during favorable market conditions due to the one-year seasoning rule for S-3 eligibility, would be permitted to use Form S-3 and conduct shelf offerings immediately after becoming an Exchange Act reporting company.
- Review existing and planned registration statements. Issuers with pending or effective shelf registration statements, including acquisition-related or resale registrations, or Form S-1 registration statements, should consider how expanded incorporation by reference, Form S-3 eligibility changes, and filer status changes could affect transaction feasibility and execution and ongoing reporting and compliance costs and processes.
- Evaluate disclosure controls and offering diligence. With the expanded ability to utilize incorporation by reference or short-form registration, issuers, underwriters, auditors, directors, and counsel should review due diligence procedures, including scrutiny of disclosure incorporated by reference, and consider voluntary updates to the same where market practice, diligence, or liability considerations merit.
- Assess filer status consequences early. Companies near the proposed $2 billion public float threshold, companies that have been public for fewer than five years, and companies currently classified as accelerated filers or smaller reporting companies should consider how the proposed two-year public float test, 60-month seasoning requirement, and expanded non-accelerated filer accommodations would affect their disclosure reporting cadence, processes, and practices.
- Consider investor relations and governance optics. Even where scaled disclosure or the absence of ICFR auditor attestation would be permitted, companies should assess whether investors, analysts, rating agencies, lenders, underwriters, or strategic counterparties may expect more fulsome disclosure or auditor attestation as a matter of market practice, credibility, or expectations.
- Review compensation and proxy disclosure processes. Companies that would become non-accelerated filers under the proposal should assess whether they would rely on scaled executive compensation disclosure and exemptions from pay-versus-performance and say-on-pay requirements, and should consider how those decisions would be communicated to boards and investors.
Conclusion
Taken together with the SEC’s recent proposal regarding voluntary biannual reporting the SEC’s registered offering and reporting proposals would, if adopted, represent a significant recalibration of the public company regulatory framework. The registered offering proposal would greatly expand the ability of many issuers to access the public capital markets quickly. The reporting proposal would simplify filer status determinations and extend scaled disclosure, governance, and ICFR attestation accommodations to a significantly greater population of reporting companies. In addition to assessing how the proposals may impact a company’s capital-raising opportunities and strategy or IPO plans, management teams and boards of directors should consider compliance cost implications, investor expectations, underwriter and auditor diligence practices, voluntary disclosure strategy, governance, and proxy disclosure strategy.
For answers to frequently asked questions about these proposals, please visit this related FAQ.
The comment periods for both proposals will remain open for 60 days following publication of the proposing releases in the Federal Register.
Our Capital Markets and Public Companies team is actively advising clients on the proposals. For more information, please contact us for assistance.
[1] Specifically, the proposal would also treat as ineligible issuers persons who were subject to, or the subject of: (1) within the past three years, certain criminal convictions, including certain felony or misdemeanor convictions involving securities transactions, fraud, false statements, bribery, theft, embezzlement, or other financial-services-related misconduct, as described in Section 15(b)(4)(B)(i)–(iv) of the Exchange Act; (2) within the past three years, certain judicial or administrative orders arising from governmental actions involving the antifraud provisions of the federal securities laws, where the underlying conduct involved material misstatements or omissions in registration statements, Exchange Act reports, proxy materials, or offering materials used in exempt offerings; (3) within the past three years, any refusal orders, stop orders, or any pending proceedings or examinations under Section 8 of the Securities Act; or (4) any pending proceeding under Section 8A of the Securities Act in connection with an offering. The proposal would also allow issuers to seek a waiver of ineligible issuer status upon a showing of good cause.
[2] The attributes the Commission may consider in designating a market include: information reporting requirements (including whether annual financial statements are required to be audited by PCAOB-registered auditors), minimum bid price, shareholder, public float requirements, number of securities quoted, dollar, share, and trading volume, and number of market makers.
[3] Section 10(a)(3) of the Securities Act requires that when a prospectus is used more than nine months after the effective date of the registration statement, the information in the prospectus must not be materially stale. Specifically, the prospectus must contain financial statements and other information that are not older than 16 months, subject to SEC rules permitting shorter periods.
[4] Enhanced registration and communication benefits include: Rule 139 (ability of broker-dealers participating in a distribution to publish research reports during the offering process subject to certain restrictions without such report constituting an “offer”), Rule 163 (permitting certain offers prior to filing a registration statement without violating Section 5(c) of the Securities Act), Rule 163A (allows pre-filing communications made more than 30 days before a registration statement on Form S-8), Rule 164 (allows post-filing free writing prospectus for offerings made on Form S-8), Rule 413(b) (allows registration of additional securities via automatically effective post-effective amendments to automatic shelf registration statements), Rule 430(B)(a) and (b) (allows omission from a base prospectus in an automatic shelf registration statement (a) information as to whether an offering is a primary or secondary or combination thereof, (b) the plan of distribution, (c) description of securities registered other than the name or class of such securities, and (d) the identification of other issuers, and omission from a form of resale prospectus the identities of selling securityholders and amounts of securities to be registered on their behalf to comply with Section 5(b)(1) of the Securities Act), Rule 433 (use of FWPs without being accompanied or preceded by a Form 10 prospectus), Rules 456(b) and 457(r) (ability to pay filing fees at the time of a shelf takedown versus at time of filing), and Rule 462 (allowing filing of an automatic shelf registration statement or post-effective amendment thereto to be immediately effective upon filing).
[5] The proposing release notes that FPIs may not use Form S-1 and Form S-3 and must instead use Form F-1 and Form F-3, respectively, as applicable. Investment companies and BDCs are required to use other forms adopted by the Commission for such entities.