May 29, 2026
Overview
On May 19, 2026, the Securities and Exchange Commission (the “SEC”) proposed the most significant overhaul of the registered offering framework since the 2005 securities offering reform.
The 511-page rulemaking proposal (Release No. 33-11418), which was issued alongside a companion proposal to enhance emerging growth company accommodations and simplify filer status for reporting companies (Release No. 33-11419), would (among other things) dramatically expand Form S-3 eligibility, replace the Well-Known Seasoned Issuer (“WKSI”) regime for domestic issuers with a new ELI/SELI framework, modernize Form S-1 practice, and preempt state blue sky laws for all SEC-registered offerings.
The proposal is intended to simplify capital formation, reduce transactional friction, and make public company status more attractive for smaller and mid-sized issuers.
The SEC has requested public comments on the proposal by July 27, 2026.
Form S-3 Eligibility Expansion – “Baby-Shelf” Limitations Would Be Eliminated
The proposal would substantially liberalize Form S-3 eligibility by eliminating several longstanding restrictions that currently limit the use of Form S-3 for smaller reporting companies and newly public issuers.
The proposal would eliminate:
- the current $75 million non-affiliate public float threshold and the corresponding “baby-shelf” limitation[1]
- the 12-calendar-month seasoning requirement[2]
- dividend and debt default disqualifiers, and
- certain electronic filing prerequisites
Any issuer that reports to the SEC pursuant to the Securities Exchange Act of 1934 (“Exchange Act”) would be eligible to use Form S-3 for both primary and secondary offerings without transaction-size limitations, so long as such issuer is:
- current and timely in its SEC filings;
- not a specified type of “ineligible issuer”; and
- not a penny stock issuer, shell company, or blank check company
Blank check companies, shell companies (other than business combination-related shell companies, including former SPACs), and issuers subject to certain antifraud-related orders, injunctions, or convictions would remain ineligible.
At-the-market (“ATM”) offerings would become more accessible but would remain limited to securities listed on a national securities exchange or another market designated by the SEC as satisfying specified criteria, which the SEC anticipates will include the OTCQX or OTCQB markets.[3]
Post-De-SPAC Companies Would Gain Immediate Form S-3 Eligibility
The proposal would provide immediate Form S-3 eligibility for post-de-SPAC companies.[4]
Foreign Private Issuers
See the section below titled “Treatment of Foreign Private Issuers” for more information regarding implications for foreign private issuers under the proposed rules.
Replacement of WKSI Framework for Domestic Issuers
The proposal would eliminate the current WKSI framework[5] and replace it with two new issuer categories:
- Eligible Listed Issuers (“ELIs”)
- Seasoned Eligible Listed Issuers (“SELIs”)
New ELI / SELI Framework
An issuer would qualify as an ELI if it:
- is eligible to use Form S-3, and
- has at least one class of common equity securities listed on a national securities exchange
ELIs would be eligible for various accommodations, including pay-as-you-go filing fees, the ability to add securities or issuers after registration statement effectiveness, flexibility regarding pre-filing and post-filing communications, and expanded ability to omit certain prospectus information.
An issuer would qualify as a SELI if it:
- meets ELI requirements, and
- has at least 12 calendar months of Exchange Act reporting history[6]
SELIs would be eligible for the same accommodations as ELIs and would also qualify for automatic shelf registration.
Additional Features
The proposal would also:
- Permit certain majority-owned subsidiaries to be included as registrants under a parent SELI’s automatic shelf registration statement, and
- Allow issuers to retain SELI status between annual determination dates even if intervening events occur
Foreign Private Issuers
See the section below titled “Treatment of Foreign Private Issuers” for more information regarding implications for foreign private issuers under the proposed rules.
Form S-1 Modernization for Newly Public Companies
The proposal would modernize Form S-1 practice by broadly expanding incorporation-by-reference flexibility as follows:
- Backward incorporation by reference would be permitted even before filing a Form 10-K[7], and
- Forward incorporation by reference would be available to all issuers meeting Form S-1’s incorporation-by-reference eligibility requirements, regardless of Smaller Reporting Company (“SRC”) status[8]
These changes are intended to simplify follow-on offerings for newly public companies.
Foreign Private Issuers
See the section below titled “Treatment of Foreign Private Issuers” for more information regarding implications for foreign private issuers under the proposed rules.
Federal Preemption Expanded for All Registered Offerings
The proposal would broadly expand federal preemption of state blue sky registration and qualification requirements by defining “qualified purchaser” under Section 18(b)(3) of the Securities Act of 1933, as amended (the “Securities Act”) to include any person to whom securities are offered or sold in a registered offering, thereby making those securities “covered securities” for purposes of state law preemption.[9]
States would retain:
- certain anti-fraud enforcement authority and
- authority to require notice filings and fees
The proposed amendments are intended to lower the costs of registered offerings of unlisted securities by eliminating state blue sky registration and qualification requirements for such offerings (and the resulting registration/qualification fees).
Expanded Shelf Registration and Communication Flexibility for BDCs, CEFs, and Insurance Companies
The proposal would also significantly expand shelf registration and communication flexibility for business development companies (“BDCs”), closed-end funds (“CEFs”), and certain insurance company issuers.
Other Proposed Amendments
The proposal would also streamline certain technical aspects of Securities Act registration practice and financial statement requirements under Regulation S-X.
Delaying Amendments Deemed Automatic
Securities Act Rule 473 would be revised so that non-automatic registration statements would be deemed to have their effectiveness automatically delayed unless the issuer affirmatively includes a legend stating that the registration statement is to become effective under Section 8(a) of the Securities Act. This would eliminate the need to include delaying amendment legends in registration statement filings.
Financial Statement Staleness Simplification
Certain financial statement staleness rules would be simplified by eliminating the income-related tests currently contained in Regulation S-X Rules 3-01(c)(2) and (3) and 8-08(b)(2) and (3), generally providing SRCs with a standardized 90-day update period for annual financial statements following fiscal year-end, and providing non-SRC Exchange Act reporting companies with an update period based on Form 10-K due dates (which are based on filer status).
Treatment of Foreign Private Issuers
Notably, the proposed ELI/SELI framework would apply only to domestic issuers. Foreign private issuers (“FPIs”) would continue to be governed by the existing WKSI framework and would not gain access to the new benefits created by the proposed amendments.
In addition, the proposal would prohibit FPIs from using Form S-3 and Form S-1, requiring them to use Form F-3 or Form F-1 instead. The SEC notes that very few FPIs currently are eligible to use Form S-3, and that Form F-3 has eligibility requirements and benefits similar to Form S-3, including short-form and shelf registration.
The SEC has indicated that its ongoing review of the FPI regulatory framework (the subject of a 2025 concept release) counsels in favor of not extending the proposed amendments to FPIs at this time.
Key SEC Data Points Regarding Potential Market Impact
The SEC’s proposing release highlights the following key data points regarding the potential impact of the proposed rules on U.S. public capital markets[10]:
- Increased Form S-3 Unlimited Offering Size Eligibility: The proposed amendments could result in an estimated increase of over 60% in the number of issuers eligible to offer an unlimited amount of securities on Form S-3 (5,555 issuers instead of 3,405 issuers).
- Issuers Qualifying as SELIs: Approximately 74% of issuers would likely qualify as SELIs under the proposal (4,114 out of 5,555), compared to approximately 37% (2,039 out of 5,555) that currently qualify as WKSIs. Those 4,114 issuers would be eligible for all enhanced registration and communication benefits (currently available only to WKSIs).
- WKSIs Qualifying as SELIs: Approximately 45% of issuers that would likely qualify as SELIs under the proposal (1,852 out of 4,114) are currently WKSIs and therefore are already eligible for the benefits that would be available to SELIs under the proposed amendments.
- Non-WKSIs Qualifying as SELIs: Approximately 55% of the issuers that would likely qualify as SELIs under the proposal (2,262 out of 4,114) are not currently WKSIs and therefore would be newly eligible for all the enhanced registration and communication benefits (including 951 “baby-shelf” issuers).
- Issuers Qualifying as ELIs: Approximately 76% of issuers would likely at least qualify as ELIs under the proposal (4,203 out of 5,555, which includes the 4,114 issuers that would likely qualify as SELIs), so 89 out of those 4,203 issuers would likely qualify for most (but not all) of the enhanced registration and communication benefits (i.e., all the benefits other than automatic shelf registration).
- Some WKSIs Could Lose Benefits: Approximately 9% of WKSIs (184 out of 2,039) could potentially lose some of the enhanced registration and communication benefits they are currently entitled to because they would not qualify as ELIs under the proposed amendments.[11]
- Form S-1 Forward Incorporation: The proposed amendments would result in an increase of up to 106% in the number of issuers[12] eligible to forward incorporate on Form S-1 by reference.
Key Takeaways and Practice Considerations
If the rules are adopted as proposed, issuers, underwriters, and their advisors should consider certain other practical implications, including:
- Missed Filing Relief: Under the proposal, issuers would remain Form S-3 eligible despite an applicable untimely filing that would otherwise cause the loss of S-3 eligibility if: (a) the filing was made within seven calendar days of the original due date, and (b) only one untimely filing occurred during the lookback period. The SEC notes in the release that this codifies existing SEC staff practice.
- Post-De-SPAC Companies: Post-de-SPAC companies would no longer be subject to the shell company three-year look-back restriction, potentially allowing immediate Form S-3 eligibility, enhancing the ability of such companies to conduct registered offerings and potentially enabling PIPE investors and sponsors to negotiate Form S-3 resale shelf registration rights.
- Potential Reduced Reliance on Private Placements: Expanded access to Form S-3 and shelf registration could reduce reliance of some issuers on PIPEs and other financing alternatives that may carry substantial pricing discounts or dilution.
- Enhanced Communication Benefits: ELIs would gain access to pre-filing written offers (Rule 163) and greater FWP flexibility (Rule 433), among other communication accommodations currently reserved for WKSIs.
- Safe Harbor Expansion for Broker-Dealer Research Reports: The Rule 139 safe harbor for certain broker-dealer research reports is conditioned on the issuer’s Form S-3 eligibility, so the expansion of Form S-3 eligibility would significantly broaden the pool of companies for which broker-dealers could publish research reports under the protection of the safe harbor while participating in an offering for the same company.
- ATM Market Implications: More issuers would be eligible to conduct primary ATM offerings, given the expanded access to S-3 eligibility. However, ATM eligibility would be limited to securities listed on a national securities exchange or traded on a market designated by the SEC. The SEC has indicated that securities qualifying for the OTCQX and OTCQB tiers of OTC Link ATS would likely continue to qualify under the proposed designation criteria. Securities quoted on a tier of the OTC Link ATS with reduced eligibility criteria (such as the OTCID Basic Market or Pink Limited Market) likely would not be eligible for ATM offerings.
- State Blue Sky Cost Savings: Issuers of unlisted securities (including non-traded REITs and BDCs) would benefit from significant cost savings by eliminating multi-state blue sky registration and qualification requirements.
- Due Diligence Readiness: Underwriters, issuers, auditors, and counsel should develop due diligence processes designed to support rapid takedowns, including continuous diligence programs for frequent market access.
- Board and Governance Considerations: Boards and finance teams should evaluate whether existing financing authorizations, disclosure controls, and blackout procedures are appropriate for taking advantage of expanded Form S-3 and ELI/SELI accommodations.
- FPI Considerations: Foreign private issuers would not benefit from the proposed ELI/SELI framework and would need to use Forms F-3 and F-1. Current FPI WKSIs would retain existing benefits but would not gain access to new benefits. The SEC is conducting a broader review of the FPI regulatory framework.
Related SEC Proposals
The SEC notes in the release that the proposed rules could interact with two other pending rule proposals:
- Filer Status Proposal (Release No. 33-11419):
- This companion proposal would simplify the filer status framework into two primary categories: large accelerated filers (LAFs) and non-accelerated filers (NAFs)[13]; by raising the LAF public float threshold to $2 billion, eliminating the accelerated filer and smaller reporting company categories, and extending scaled disclosure accommodations (including relief from SOX Section 404(b) auditor attestations and potentially longer filing deadlines) to all NAFs.
- The SEC asserts that together with the offering reform proposal, these changes could reduce offering-related costs and ongoing compliance burdens, incentivizing certain companies to go public or remain public.
- However, the SEC acknowledges that reduced disclosure could increase information asymmetry for affected issuers, though approximately 85% of affected filers with public float below $75 million are already SRCs with scaled disclosure.
- Semi-Annual Reporting Proposal (Release No. 33-11414):
- If adopted, reporting companies could elect semi-annual interim reporting instead of quarterly reports, reducing reporting costs.
- The SEC asserts that combined with expanded Form S-3 eligibility and shelf offering benefits, this could further lower the cost of registered capital raising.
- However, the SEC acknowledges that less frequent interim reporting by certain issuers could reduce comparability across issuers and increase information asymmetry and investor information search costs.
- For more information on the SEC’s semi-annual reporting proposal, see the SRFC client alert on the proposal, which can be found here.
The full SEC registered offering reform rule proposal is available here.
If you have any questions regarding this client alert, please call or e-mail your SRFC attorney.
DISCLAIMER: This communication, which we believe may be of interest to our clients and friends of the firm, is for general information only. It is not a full analysis of the matters presented and should not be relied upon as legal advice. This may be considered attorney advertising in some jurisdictions.
[1] Currently, the aggregate market value of an issuer’s voting and non-voting common equity held by non-affiliates (“non-affiliate public float”) must be $75 million or more for an issuer to offer an unlimited amount of securities on Form S-3 in primary offerings. Issuers with non-affiliate public floats of less than $75 million (“baby-shelf” issuers) are generally limited to an aggregate amount of primary offerings in a twelve-calendar-month period equal to no more than one-third of the issuer’s non-affiliate public float.
[2] Currently, General Instruction I.A.3(a) requires an issuer to have been an Exchange Act reporting company for at least 12 calendar months before becoming eligible to use Form S-3.
[3]The SEC notes in the release that an issuer must be eligible to register a primary offering on Form S-3, Form F-3, or Form N-2 to register a primary ATM offering, so expanding Form S-3 eligibility would increase the population of issuers eligible to conduct primary ATM offerings.
[4] Under current SEC rules, former SPAC targets are treated as shell companies and are considered “ineligible issuers” under Rule 405 for three years following the filing of the “Super 8-K,” effectively preventing WKSI status, use of certain free writing prospectuses, and limiting Form S-3 eligibility during that period. The proposal would create an exception to the shell company lookback rule for de-SPAC companies, provided the issuer is not a shell company at the time of filing.
[5] Under the current SEC framework, a company generally qualifies as a WKSI if it meets the Form S-3 registrant requirements, is not an “ineligible issuer” under Rule 405, and either: (a) has a worldwide market value of outstanding voting and non-voting common equity held by non-affiliates of $700 million or more, or (b) has issued at least $1 billion aggregate principal amount of non-convertible securities (other than common equity) in SEC-registered offerings for cash in the preceding three years.
[6] The determination date for ELI and SELI status would be consistent with those currently applied to WKSIs under existing Rule 405.
[7] Under the current rules, the ability for issuers to backward incorporate information into Form S-1 by reference is limited to issuers that, among other things, have filed an annual report for their most recently completed fiscal year.
[8] Under the current rules, the ability for issuers to forward incorporate information into Form S-1 by reference is limited to issuers that qualify as smaller reporting companies (SRCs).
[9] The SEC notes in the release that federal preemption of state blue sky laws currently applies to registered offerings in which the securities being offered and sold are listed or approved for listing on a national securities exchange, but that such preemption does not currently apply to registered offerings of unlisted securities.
[10] Based on 2024 estimated data cited by the SEC in the proposing release. Actual data may vary if the rules are adopted as proposed. Except as otherwise noted, “issuers” in this data point summary refers to Exchange Act reporting companies that filed a Form 10-K in 2024, excluding asset-backed issuers, shell companies, and BDCs.
[11] The SEC notes in the release that this effect could be mitigated to the extent that: (a) these WKSIs are majority-owned subsidiaries of ELIs or SELIs under the proposed amendments and are conducting certain specified registered offerings, and (b) these issuers choose to list on a national securities exchange.
[12] The SEC derived this estimate from a separate economic analysis prepared for the companion proposal to enhance emerging growth company accommodations and simplify filer status for reporting companies (Release No. 33-11419). The SEC notes in the public offering reform release that as of 2024, there were 2,904 SRCs and 3,067 Exchange Act reporting companies that were non-SRCs.
[13] In addition, the proposed rules would establish a subcategory of NAFs called small non-accelerated filers that would receive an additional 30 days to file their Form 10-K annual reports and an additional five days to file their Form 10-Q quarterly reports.