# Conformed to Federal Register Version > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/agency%3Asec%3A7fa49cf7b6526683 ## Record - **Collection:** Agency decision - **Document type:** Agency decision ## Text Conformed to Federal Register Version SECURITIES AND EXCHANGE COMMISSION 17 CFR Parts 210, 229, 230, 232, 239, 240, and 249 [Release Nos. 33-11418; 34-105513; IC-36160; File No. S7-2026-17] RIN 3235-AN41 Registered Offering Reform AGENCY: Securities and Exchange Commission. ACTION: Proposed rule. SUMMARY: The Securities and Exchange Commission (“Commission”) is proposing amendments that are intended to facilitate capital formation in the public securities markets. Specifically, the proposed amendments would make Form S-3 and the ability to conduct shelf offerings available to significantly more issuers, extend certain benefits currently reserved for “well-known seasoned issuers” to a broader set of issuers, and modernize Form S-1 by expanding the ability to incorporate information by reference into that form. The proposed amendments also would make conforming changes to the registration, communication, and offering process for certain business development companies and registered closed-end investment companies that register securities on Form N-2. We also are proposing to amend the communication rules to permit broad-based advertising for certain insurance products. In addition, we are proposing certain other amendments that are intended to modernize certain rules. Finally, to mitigate the costs and complexity of conducting a registered offering, the proposed amendments would preempt State securities law registration and qualification requirements for all registered offerings. DATES: Comments should be received on or before July 27, 2026. ADDRESSES: Comments may be submitted by any of the following methods: 1 Electronic Comments: • Use the Commission’s internet comment form (https://www.sec.gov/comments/s7-202617/registered-offering-reform). • Send an email to rule-comments@sec.gov. Please include File Number S7-2026-17 on the subject line. Paper Comments: • Send paper comments to Vanessa A. Countryman, Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090. All submissions should refer to File Number S7-2026-17. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method of submission. The Commission will post all submitted comments on the Commission’s website (https://www.sec.gov/rules regulations/public-comments/s7-2026-17). Do not include personally identifiable information in submissions; you should submit only information that you wish to make available publicly. The Commission may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. Studies, memoranda, or other substantive items may be added by the Commission or staff to the comment file during this rulemaking. A notification of the inclusion in the comment file of any such materials will be made available on the Commission’s website. To ensure direct electronic receipt of such notifications, sign up through the “Stay Connected” option at www.sec.gov to receive notifications by email. A summary of the proposal of not more than 100 words is posted on the Commission’s website (https://www.sec.gov/rules-regulations/2026/05/S7-2026-17). 2 FOR FURTHER INFORMATION CONTACT: Mark W. Green, Senior Special Counsel, or Isabel Rivera, Special Counsel, Office of Rulemaking, Division of Corporation Finance, at (202) 551-3430, Matt McNair, Senior Adviser to the Chief Counsel, Office of Chief Counsel, Division of Corporation Finance, at (202) 551-3500, Pamela Ellis, Senior Counsel; Blair Burnett, Bradley Gude, Branch Chiefs; or Brian McLaughlin Johnson, Assistant Director, at (202) 551-6792, Investment Company Regulation Office, Division of Investment Management; U.S. Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549. SUPPLEMENTARY INFORMATION: We are proposing to amend the following rules and forms: Commission Reference Regulation S-X Regulation S-K Regulation M-A Regulation AB Regulation S-T Securities Act of 1933 (“Securities Act”) 1 1 Rule 3-01 of Regulation S-X Rule 8-08 of Regulation S-X Item 305 of Regulation S-K Item 1004 of Regulation M-A Item 1100 of Regulation AB Rule 101 of Regulation S-T Rule 201 of Regulation S-T Rule 202 of Regulation S-T Rule 137 Rule 138 Rule 139 Rule 139b Rule 146 Rule 163 Rule 163A Rule 164 Rule 401 Rule 405 Rule 406 Rule 413 Rule 415 Rule 424 Rule 430B 15 U.S.C. 77a et seq. 3 CFR Citation (17 CFR) § 210.3-01 § 210.8-08 § 229.305 § 229.1004 § 229.1100 § 232.101 § 232.201 § 232.202 § 230.137 § 230.138 § 230.139 § 230.139b § 230.146 § 230.163 § 230.163A § 230.164 § 230.401 § 230.405 § 230.406 § 230.413 § 230.415 § 230.424 § 230.430B Securities Exchange Act of 1934 (“Exchange Act”) 2 Securities Act and Investment Company Act of 1940 (“Investment Company Act”) 3 2 15 U.S.C. 78a et seq. 3 15 U.S.C. 80a et seq. Rule 433 Rule 456 Rule 457 Rule 462 Rule 464 Rule 473 Rule 479 Rule 482 Rule 497 Form S-1 Form S-3 Form S-8 Form S-11 Form S-4 Form F-3 Form F-4 Form 20-F Form 10-K Schedule 14A Rule 15c2-8 Form N-2 § 230.433 § 230.456 § 230.457 § 230.462 § 230.464 § 230.473 § 230.479 § 230.482 § 230.497 § 239.11 § 239.13 § 239.16b § 239.18 § 239.25 § 239.33 § 239.34 § 249.220f § 249.310 § 240.14a-101 § 240.15c2-8 § 239.14 and § 274.11a-1 4 TABLE OF CONTENTS I. INTRODUCTION .................................................................................................................... 8 A. Overview of the Proposed Amendments .......................................................................... 11 B. Eliminating Public Float Requirements and Other Indicia of Market Following ............. 15 II. DISCUSSION OF PROPOSED AMENDMENTS ................................................................ 22 A. Form S-3 ........................................................................................................................... 22 1. Background................................................................................................................ 22 2. Proposed Amendments .............................................................................................. 45 B. The Enhanced Registration and Communication Benefits ............................................. 109 1. Background.............................................................................................................. 109 2. Proposed Amendments ............................................................................................ 113 C. Form S-1 ......................................................................................................................... 134 1. Background.............................................................................................................. 135 2. Proposed Amendments ............................................................................................ 140 D. Business Development Companies and Closed-End Funds ........................................... 152 1. Background.............................................................................................................. 154 2. Proposed Amendments ............................................................................................ 158 E. Registered Non-Variable Annuity Advertising .............................................................. 167 1. Background.............................................................................................................. 167 2. Proposed Amendments ............................................................................................ 171 F. Preemption of State Securities Law Registration and Qualification .............................. 180 1. Background.............................................................................................................. 181 2. Proposed Amendments ............................................................................................ 184 G. Other Rule Amendments ................................................................................................. 189 1. Delaying Amendments ............................................................................................ 189 2. Elimination of Certain Conditions Relating to Age of Financial Statements ......... 191 3. Conforming and Technical Amendments ................................................................ 196 III. OTHER MATTERS.............................................................................................................. 203 IV. ECONOMIC ANALYSIS .................................................................................................... 203 A. Overview ......................................................................................................................... 203 B. Baseline ........................................................................................................................... 205 1. Form S-1 and Form S-3 Issuers ............................................................................... 206 2. Form N-2 and Insurance Company Issuers ............................................................. 227 5 C. Benefits and Costs........................................................................................................... 234 1. Benefits and Costs of Proposed Amendments to Form S-3 Eligibility ................... 235 2. Benefits and Costs of Amendments to Eligibility for the Enhanced Registration and Communication Benefits ......................................................................................... 248 3. Benefits and Costs of Amendments to Incorporation by Reference in Form S-1 ... 259 4. Benefits and Costs of Amendments to Preempt State Regulation and Qualification ................................................................................................................................. 260 5. Business Development Companies, Closed-End Funds, and Registered Non-Variable Annuity Advertising ................................................................................................ 263 6. Benefits and Costs of Proposed Amendments to Rule 473 and Regulation S-X .... 267 7. Other Commission Proposals .................................................................................. 270 8. Aggregate Monetized Benefits and Costs ............................................................... 275 D. Effects on Efficiency, Capital Formation, and Competition........................................... 286 1. Effects on Efficiency ............................................................................................... 286 2. Effects on Capital Formation................................................................................... 288 3. Effects on Competition ............................................................................................ 290 E. Reasonable Alternatives.................................................................................................. 291 1. Retain and Modify the Public Float-Based Conditions for Form S-3 Eligibility and WKSI Status ............................................................................................................ 291 2. Retain WKSI Definition and Use an Alternative Measure of Whether an Issuer is “Well-Known” ......................................................................................................... 292 F. Request for Comment ..................................................................................................... 293 V. PAPERWORK REDUCTION ACT ..................................................................................... 295 A. Summary of the Collections of Information ................................................................... 295 B. Summary of the Proposed Amendments’ Estimated Effects on the Collections of Information ..................................................................................................................... 296 C. Incremental and Aggregate Burden and Cost Estimates................................................. 302 D. Request for Comment ..................................................................................................... 306 VI. CONGRESSIONAL REVIEW ACT .................................................................................... 307 VII. INITIAL REGULATORY FLEXIBILITY ACT ANALYSIS AND REGULATORY FLEXIBILITY ACT CERTIFICATION .............................................................................. 308 A. Initial Regulatory Flexibility Act Analysis ...................................................................... 308 1. Reasons for, and Objectives of, the Proposed Action ............................................. 308 2. Legal Basis .............................................................................................................. 309 3. Small Entities Subject to the Proposed Amendments ............................................. 309 6 4. Projected Reporting, Recordkeeping, and Other Compliance Requirements ......... 310 5. Duplicate, Overlapping, or Conflicting Federal Rules ............................................ 311 6. Significant Alternatives ........................................................................................... 311 B. Request for Comment ..................................................................................................... 312 C. Certification Relating to Issuers of Registered Non-Variable Annuities........................ 312 STATUTORY AUTHORITY .................................................................................................... 313 7 I. INTRODUCTION We are proposing amendments that are intended to facilitate capital formation in the public securities markets. To achieve that goal, the proposed amendments would amend certain of our Securities Act rules and forms to provide issuers with greater flexibility to determine the timing and structure of their registered offerings and reduce the costs of conducting a registered offering by, among other things, simplifying and modernizing the applicable rules and forms. 4 The Commission’s longstanding, three-part mission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. Over the years, the Commission has engaged in various rulemakings with the express goal of facilitating capital formation. 5 Some of those rulemakings focused specifically on facilitating capital formation with respect to registered offerings. 6 As the Commission has recognized, the public capital markets offer several 4 For purposes of this release, we use the terms “registered” or “public” offerings or markets interchangeably, the terms “exempt” or “private” offerings or markets interchangeably, and the terms “public companies,” “companies,” “registrants,” and “issuers” interchangeably. Unless explained in the text, the use of different terms in different places is not meant to connote a significant difference. 5 See, e.g., Facilitating Capital Formation and Expanding Investment Opportunities by Improving Access to Capital in Private Markets, Release No. 33-10884 (Nov. 2, 2020) [86 FR 3496, 3551 (Jan. 14, 2021)] (“Harmonization Adopting Release”) (“[T]he amendments simplify, harmonize, and improve certain aspects of the exempt offering framework to promote capital formation.”); Exemptions to Facilitate Intrastate and Regional Securities Offerings, Release No. 33-10238 (Oct. 26, 2016) [81 FR 83494, 83494 (Nov. 21, 2016)] (“The amendments . . . are designed to facilitate capital formation.”); Revisions to the Eligibility Requirements for Primary Securities Offerings on Forms S-3 and F-3, Release No. 33-8878 (“Baby Shelf Adopting Release”) (Dec. 19, 2007) [72 FR 73534, 73548 (Dec. 27, 2007)] (“We therefore believe that extending shelf registration benefits to more companies in the manner that we have chosen will facilitate the capital-raising efforts of smaller public companies who currently have fewer financing options than their larger counterparts.”); Securities Offering Reform, Release No. 33-8591 (July 19, 2005) [70 FR 44721, 44796 (Aug. 3, 2005)] (“Securities Offering Reform Adopting Release”) (stating the Commission’s belief that the rules will “make the capital formation process more efficient”). 6 See, e.g., Securities Offering Reform for Closed-End Investment Companies, Release No. 33-10771 (Apr. 8, 2020) [85 FR 33290, 33321 (June 1, 2020)] (“CEF Offering Reform Adopting Release”) (“The rule is designed to reduce regulatory impediments to capital formation and provide more flexibility to these funds to conduct registered securities offerings.”); Baby Shelf Adopting Release at 73534 (“The amendments are intended to allow more companies to benefit from the greater flexibility and efficiency in accessing the public securities markets afforded by Form S-3 and Form F-3 without compromising investor protection.”); Securities Offering Reform Adopting Release at 44794 (“Providing flexibility for registered offerings may encourage issuers to 8 benefits to issuers and investors alike. 7 For example, the Commission has noted that issuers can raise capital through the public markets on more favorable terms as compared to the private markets. 8 This is due, in large part, to the “substantial pricing discounts that private investors often demand to compensate them for the relative illiquidity of the restricted shares they are purchasing” in exempt offerings. 9 Both issuers and their investors benefit from this characteristic of the public markets because investors “may be less subject to the risk of dilution in the value of their shares if the companies in which they invest are able to meet more of their capital needs in the public markets.” 10 Investors in registered offerings also enjoy additional benefits and protections. As compared to exempt offerings, issuers conducting registered offerings are required to provide raise capital through the registration process instead of through private placements.”); Asset-Backed Securities, Release No. 33-8518 (Dec. 22, 2004) [70 FR 1506, 1591 (Jan. 7, 2005)] (“[W]e anticipate that these rules will enhance capital formation by simplifying the process of registering an offering of asset-backed securities.”). 7 See, e.g., Solicitations of Interest Prior to a Registered Public Offering, Release No. 33-10699 (Sept. 25, 2019) [84 FR 53011, 53028 (Oct. 4, 2019)] (“[I]f the final rule encourages additional issuers to conduct a registered securities offering, issuers may benefit from greater secondary market liquidity associated with registered securities, compared to exempt securities, to the extent that greater liquidity makes the issuers’ securities potentially more attractive to prospective investors. Any additional issuers that elect to conduct a registered offering in part as a result of the final rule also may benefit from the greater ease of raising follow-on financing through future registered offerings.”); Baby Shelf Adopting Release at 73548 (“Consequently, we anticipate that the amendments will result in smaller issuers raising more capital through the public markets rather than through exempt offerings conducted in the domestic and offshore markets. Investors in these companies will benefit by such companies’ improved access to capital on more favorable terms.”); Securities Offering Reform Adopting Release at 44794 (“Typically, registered securities enjoy more liquid markets than unregistered securities. Therefore, registered securities are less likely to be subject to a liquidity discount. In addition, registered securities offerings provide a potentially larger investor base than that available to those who participate in private placements.”). 8 See, e.g., Baby Shelf Adopting Release at 73548 (“We believe that extending shelf registration benefits to more companies, in the manner we have chosen, will facilitate the capital-raising efforts of smaller public companies who currently have fewer financing options than their larger counterparts. . . . By selling into the public markets, these companies may be able to avoid the substantial pricing discounts that private investors often demand to compensate them for the relative illiquidity of the restricted shares they are purchasing.”); Securities Offering Reform Adopting Release at 44794 (“[R]egistered securities offerings provide a potentially larger investor base than that available to those who participate in private placements. Accordingly, issuers may incur lower transaction costs when raising capital because they will have access to a much deeper market for their securities and may have to expend fewer resources to locate investors.”). 9 Baby Shelf Adopting Release at 73548. 10 Id. 9 their investors with more robust disclosures, and those disclosures are subject to enhanced liability standards. 11 Although these requirements may increase compliance costs and litigation risks for issuers, those issuers ultimately may benefit from a lower cost of capital due, in part, to investors’ reduced risk perception with respect to registered offerings. 12 When pursuing the goal of facilitating capital formation, the Commission also has sought to ensure investors remain appropriately protected. 13 To the extent there is a trade-off between efforts to facilitate capital formation and protect investors, the Commission has calibrated its rules with an eye towards balancing those two goals. This proposal is intended to achieve the benefits associated with increased capital formation in the public securities markets. At the same time, we are committed to ensuring that investors remain appropriately protected. We recognize, however, that several aspects of our current Securities Act rules and forms, while intended to help protect investors at the time they were adopted, may now have the unintended effect of unduly inhibiting capital formation in today’s markets. We believe, therefore, that it is appropriate to recalibrate certain of our rules 11 Harmonization Adopting Release at 3562 (noting certain “investor protections associated with registered offerings” that are not associated with exempt offerings, such as “gun jumping provisions of the Securities Act . . . staff review, Section 11 liability, disclosure requirements in the registration statement, and Exchange Act reporting requirements”). 12 See, e.g., Accelerated Filer and Large Accelerated Filer Definitions, Release No. 34-88365 (Mar. 12, 2020) [85 FR 17178, 17215 (Mar. 26, 2020)] (“2020 Accelerated Filer Adopting Release”) (“[A]t the issuer level, more reliable disclosures are generally expected, based on economic theory, to lead investors to demand a lower expected return to hold an issuer’s securities (i.e., a lower cost of capital).”). 13 See, e.g., Harmonization Adopting Release at 3498 (“We are amending the exempt offering framework to close gaps and reduce complexities that may impede access to capital for issuers and thereby limit investment opportunities, while preserving or enhancing important investor protections.”); Baby Shelf Adopting Release at 73534 (“These amendments are intended to allow a larger number of public companies to benefit from the greater flexibility and efficiency in accessing the public securities markets afforded by Form S-3 and Form F-3 in a manner that is consistent with investor protection.”); Securities Offering Reform Adopting Release at 44761 (“The amendments we are adopting today are designed to ensure that appropriate investor protections are maintained.”); Shelf Registration, Release No. 33-6499 (Nov. 17, 1983) [48 FR 52889, 52890 (Nov. 23, 1983)] (“Shelf Registration Adopting Release”) (“The Commission believes that limiting the Rule to primary offerings of securities qualified to be registered on Form S-3 or F-3 and to traditional shelf offerings strikes the appropriate balance.”). 10 and forms to ensure that they do not unduly restrict issuers’ abilities to raise capital in a timely, efficient manner via a registered offering. A. Overview of the Proposed Amendments As discussed in more detail in section II below, the proposed amendments can be separated into several categories. First, we are proposing to revise Form S-3’s eligibility requirements to allow a broader range of issuers to conduct offerings using the form, including delayed primary offerings (which, for purposes of this release, we refer to as “shelf offerings”) 14 and at the market (“ATM”) primary offerings. Notably, the proposed amendments would eliminate the following eligibility requirements in Form S-3: • The issuer must have filed all the material required to be filed pursuant to section 13, 14, or 15(d) of the Exchange Act for a period of at least 12 calendar months immediately preceding the filing of the registration statement (which we refer to as the “One-Year Seasoning” requirement); and • The aggregate value of the issuer’s voting and non-voting common equity held by nonaffiliates (i.e., “public float”) must be $75 million or more to offer an unlimited amount of securities on Form S-3. 15 These proposed changes would significantly expand the population of issuers eligible to offer an unlimited amount of securities on Form S-3. Specifically, we estimate that there could be an increase of over 60 percent in the number of issuers eligible to offer an unlimited amount of 14 When an issuer conducts a delayed offering under a shelf registration statement, it is commonly described as taking securities “off the shelf.” These delayed offerings are referred to as “takedowns.” 15 Throughout this release, “public float” refers to the aggregate market value of the voting and non-voting common equity held by non-affiliates. 11 securities on Form S-3. 16 As discussed in section II.A below, these newly eligible issuers would benefit from the cost savings and capital raising efficiencies and flexibilities associated with the ability to use Form S-3 and conduct shelf offerings. Second, we are proposing to extend certain benefits currently reserved for “well-known seasoned issuers” (“WKSIs”) and other seasoned issuers (which we refer to as the “Enhanced Registration and Communication Benefits”) to a larger set of issuers. 17 Those benefits, which are discussed in section II.B below, are intended to further the Commission’s longstanding goal of “facilitat[ing] capital formation, and possibly lower[ing] the cost of capital, by improving access to the public capital markets.” 18 Currently, in order to be a WKSI (and, in turn, qualify for all of the Enhanced Registration and Communication Benefits), an issuer must, among other things, either have a public float of $700 million or more or have issued at least $1 billion aggregate principal amount of non-convertible securities, other than common equity, in primary offerings for cash, not exchange, registered under the Securities Act. Under the proposed amendments, issuers would not be required to meet either of these metrics in order to qualify for the Enhanced Registration and Communication Benefits. Instead, under the proposed amendments, issuers generally would qualify for those benefits if they are eligible to use Form S-3 and have at least 16 See Table 2 and the accompanying discussion in section IV.B.1.a below for the methodology used in developing (and the assumptions underlying) this estimate. 17 Among other things, the Enhanced Registration and Communication Benefits include the ability to file shelf registration statements on Form S-3 that are automatically effective upon filing with the Commission, to exercise greater flexibility with respect to pre-filing and post-filing communications, and to pay filing fees at the time of the takedown, rather than at the time of filing a Form S-3. See infra sections II.B.1 and II.B.2.a for a more comprehensive discussion of the Enhanced Registration and Communication Benefits, the types of issuers that currently qualify for each of the benefits, and the types of issuers that would qualify for each of the benefits under the proposed amendments. 18 Securities Offering Reform Adopting Release at 44793. 12 one class of common equity securities listed on a national securities exchange. 19 Thus, as a result of the proposed amendments, we estimate that there could be an increase of over 200 percent in the number of issuers eligible for all of the Enhanced Registration and Communication Benefits. 20 Third, we are proposing to revise Form S-1 to expand issuers’ abilities to incorporate by reference information filed before (i.e., backward incorporation by reference) and after (i.e., forward incorporation by reference) the effective date of the registration statement. As discussed in section II.C below, the ability to backward incorporate currently is limited to issuers that, among other things, have filed an annual report for their most recently completed fiscal year. The ability to forward incorporate currently is limited to issuers that, among other things, are smaller reporting companies (“SRCs”). 21 Under the proposed amendments, issuers that meet Form S-1’s requirements to incorporate by reference would be able to backward incorporate regardless of whether they had filed an annual report for their most recently completed fiscal year and forward incorporate regardless of whether they are an SRC. This would allow a greater number of issuers 19 A “national securities exchange” is a securities exchange that has registered with the Commission under section 6 of the Exchange Act. 15 U.S.C. 78f. In this release, we refer to issuers that have at least one class of common equity securities listed on a national securities exchange as “exchange-listed.” To qualify for the ability to file automatic shelf registration statements, issuers also would be required to have been subject to the Exchange Act’s reporting requirements for a period of at least 12 calendar months. 20 See Table 7 and the accompanying discussion in section IV.B.1.a below for the methodology used in developing (and the assumptions underlying) this estimate. 21 To be able to forward incorporate by reference, an issuer must be an SRC that meets the eligibility requirements for incorporation by reference in General Instruction VII of Form S-1, which includes being subject to the reporting requirements pursuant to section 13 or 15(d) of the Exchange Act, having filed all reports and other materials required to be filed by sections 13(a), 14, or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports and materials), having filed an annual report required under section 13(a) or 15(d) of the Exchange Act for the most recently completed fiscal year, and not being a BSP issuer, as defined infra note 180. See infra section II.C for a discussion of the requirements to incorporate by reference on Form S-1. 13 to enjoy the cost savings associated with incorporation by reference, with an estimated increase of up to 106 percent in the number of issuers eligible to forward incorporate on Form S-1. 22 Fourth, in addition to the proposed amendments to the registration process for issuers that register securities on Form S-1 and Form S-3, we are also proposing to modify the registration, communication, and offering process for certain business development companies (“BDCs”) and registered closed-end investment companies (“registered CEFs”, collectively with BDCs, “affected funds”) that register securities on Form N-2, broadening their access to shelf offerings and the Enhanced Registration and Communication Benefits. These amendments would allow a greater number of affected funds to raise capital more efficiently and would provide more affected funds flexibility to manage the timing of their offerings in response to market opportunities. Fifth, we are proposing to amend Rule 482 and other related rules to permit broad-based advertising relating to certain insurance products as discussed in more detail in section II.E below. Sixth, under section 18(b)(3) of the Securities Act, 23 we are proposing to define “qualified purchaser” such that State securities law registration and qualification requirements would be preempted with respect to any registered offering. As discussed in section II.F below, such preemption currently applies to registered offerings in which the securities being offered and sold are listed or approved for listing on a national securities exchange. Preemption currently 22 We calculated this estimated increase by comparing the number of Exchange Act reporting issuers that are SRCs to the number of such issuers that are non-SRCs, according to the economic analysis we conducted in another proposing release. See Enhancement of Emerging Growth Company Accommodations and Simplification of Filer Status for Reporting Companies, Release No. 33-11419 (May 19, 2026) [91 FR 30086 (May 21, 2026)] (“Filer Status Proposal”) (noting in EA Table 2 that, as of 2024, there were 2,904 SRCs and 3,067 Exchange Act reporting companies that were non-SRCs). 23 15 U.S.C. 77r(b)(3). 14 does not, however, apply to registered offerings of unlisted securities. The proposed amendment, therefore, would eliminate the costs associated with complying with numerous states’ registration and qualification requirements for registered offerings of unlisted securities. Finally, we are proposing certain other amendments that are intended to modernize our rules. We discuss those proposed amendments in section II.G below. 24 We invite and encourage interested parties to submit comments on any aspect of the proposed amendments. When commenting, please include the reasoning in support of your position or recommendation and provide any supporting documentation or data. B. Eliminating Public Float Requirements and Other Indicia of Market Following As noted in section I.A above, the proposed amendments would overhaul the criteria used to determine whether an issuer can use Form S-3 or the Enhanced Registration and Communication Benefits. For example, the proposed amendments would eliminate the requirements that issuers exceed a specified public float or amount of registered debt issued threshold to be eligible to offer an unlimited amount of securities on Form S-3 or to qualify for all of the Enhanced Registration and Communication Benefits. The proposed amendments also would eliminate the One-Year Seasoning requirement for Form S-3 eligibility. These proposed amendments are intended to expand the population of issuers eligible to use Form S-3 and the Enhanced Registration and Communication Benefits. As discussed in section II.A.1 below, this goal is consistent with several prior Commission rulemakings. We recognize, however, that the proposed amendments also would, in many ways, represent a departure from the Commission’s historical approach. An issuer’s eligibility to use Form S-3 24 We also are proposing certain conforming and technical amendments to some of our rules and forms that are intended to simplify them and avoid redundancy. These amendments generally are not intended to have a substantive effect and are discussed in more detail in section II.G.3 below. 15 has, since the form’s inception, depended on whether the issuer satisfies the Exchange Act seasoning and minimum public float requirements. 25 Similarly, since the Commission adopted the Enhanced Registration and Communication Benefits, an issuer’s ability to use those benefits has been conditioned, in part, on whether the issuer exceeds either a minimum public float or amount of registered debt issued threshold. 26 In adopting rules and forms permitting short-form and shelf registration and the Enhanced Registration and Communication Benefits, and in periodically reconsidering the requirements issuers must meet to qualify for some of those benefits, the Commission has sought to reduce issuers’ costs of raising capital while maintaining investor protection. 27 The proposed amendments are intended to reflect the Commission’s experience since it adopted or last amended the rules, including a reassessment of how best to protect investors in a manner that does not unduly limit issuers’ access to short-form and shelf registration and the Enhanced Registration and Communication Benefits. As the Commission has previously recognized, public securities offerings provide investors with benefits and protections not available in the private markets. The existing eligibility requirements, including the One-Year Seasoning and public float requirements, are intended to protect investors. Those eligibility requirements, however, also limit the number of issuers that may utilize Form S-3 and the Enhanced Registration and Communication Benefits, thus prompting some issuers to raise capital through other means, such as an exempt offering or private financing, in lieu of conducting a registered offering. Because registered offerings often 25 See infra section II.A.1.b and c. 26 See infra section II.B.1. 27 See supra note 13. 16 ultimately benefit issuers and investors alike, we believe it is appropriate to expand significantly the population of issuers eligible to use Form S-3, conduct shelf and ATM offerings, and qualify for the Enhanced Registration and Communication Benefits so as to encourage more registered offerings, provided that appropriate investor protections are maintained. The proposed changes to these eligibility requirements also are intended to reflect technological advancements and developments in the financial markets since the Commission adopted short-form registration, shelf registration, and the Enhanced Registration and Communication Benefits. The Commission has stated that the eligibility criteria in Form S-3 “are based on the Commission’s belief that information about companies using the form already is known or is so readily available that it need not be repeated in a prospectus.” 28 The Commission historically relied on that criteria—in particular, the Exchange Act reporting history and minimum public float requirements—as indicia of whether an issuer was widely followed and, in turn, whether information about the issuer had been sufficiently disseminated into the marketplace such that short-form registration was appropriate. 29 The Commission relied on a similar rationale in conditioning the ability to use the Enhanced Registration and Communication Benefits on an issuer’s ability to meet the specified public float or registered debt thresholds. 30 When short-form registration was first introduced in 1967, Commission filings were submitted and available only in paper copy. The Commission attempted to facilitate broader 28 Reproposal of Comprehensive Revision to System for Registration of Securities Offerings, Release No. 33-6331 (Aug. 6, 1981) [46 FR 41902, 41913 (Aug. 18, 1981)] (“1981 Reproposal”). 29 See id. (explaining that short-form eligibility is premised “generally on dissemination of information in the marketplace, as represented by the length and nature of compliance by the company with the reporting requirements of the Exchange Act, and, with respect to proposed Form S-3, on the registrant’s float”). 30 See Securities Offering Reform Adopting Release at 44791 (“For issuers with publicly traded equity, we believe that market capitalization provides a sufficient proxy for determining whether or not an issuer is well followed. For issuers of fixed income securities, we believe that the amount of fixed income securities sold in registered offerings for cash in the past three years provides a sufficient proxy.”). 17 distribution of this information by contracting with an outside company to create and distribute microfiche copies to designated Commission public reference rooms, 31 but obtaining copies of these documents was cumbersome and expensive. Notably, an individual had to either make paper copies in the Commission’s public reference rooms or order copies from service bureaus which, in turn, had to make and sell paper copies as requested. 32 Thus, because it was difficult for investors to obtain information about an issuer, the Commission sought to ensure that, for companies using short-form registration, there was “wide dissemination of information about such companies in the market place” and that “securities analysts [would] follow companies of this size.” 33 In the intervening years, technological developments have transformed how information is disseminated into the marketplace and facilitated widespread access to issuer information. For example, issuers today must make their Commission filings electronically through the Commission’s Electronic Data Gathering, Analysis, and Retrieval system (“EDGAR”), 34 which 31 See Release No. 34-8345 (June 28, 1968) [not published in the Federal Register]. 32 To review Commission filings, investors had to either physically visit one of the Commission’s public reference rooms or subscribe to commercial data vendors for a considerable fee. See Yen-Cheng Chang, Alexander Ljungqvist, and Kevin Tseng, Do Corporate Disclosures Constrain Strategic Analyst Behavior?, 36 REV. OF FIN. STUD. 3614, 3169 (2023) (citing letter to Chairman Richard C. Breeden and Representative Edward J. Markey from Patricia Glass Schuman, American Library Association et al. dated January 13, 1992, available at http://www.bio.net/bionet/mm/ag-forst/1992-January/000187.html) (noting that pre-EDGAR one vendor charged “a fee of $125 per month, plus a connect charge of $39 an hour, plus a charge of 2.5 cents per line of data plus search charges which range from $6 to $51 per search” while another charged “$84 per hour plus $1 per page” and noting as an example that “obtaining Ford’s 1994 10-K from [the vendor] would have cost $145 in page charges alone”). 33 Short Form for the Registration of Securities, Release No. 33-5923 (Apr. 11, 1978) [43 FR 16672, 16673 (Apr. 19, 1978)] (“1978 Amendments to Short-Form Registration”). 34 In 1993, the Commission began mandating electronic filings on EDGAR on a phased-in basis. See Rulemaking for EDGAR System, Release No. 33-6977 (Feb. 23, 1993) [58 FR 14628 (Mar. 18, 1993)] (“1993 EDGAR Adopting Release”). This phase-in culminated in all corporate issuers becoming subject to electronic filing requirements in 1996. See Rulemaking for EDGAR System, Release No. 33-7122 (Dec. 19, 1994) [59 FR 67752 (Dec. 30, 1994)]. 18 makes these filings immediately available to the investing public without charge. 35 In addition, corporate news is disseminated in an electronic world, and issuers today make their Commission filings and other company information available through recognized electronic channels of distribution, including their websites and other digital technologies. Today’s investors can access and follow publicly filed information about an issuer for low or no cost in real time and on demand. Further, although Commission filings have been available to the investing public electronically, free of charge, through EDGAR since the mid-1990s and were available to investors in 2005 when the Commission adopted the Enhanced Registration and Communication Benefits and in 2007 when the Commission last considered eliminating the public float requirement in Form S-3, 36 we believe such information has become even more widely accessible in the intervening years. Whereas only 71 percent of U.S. adults used the internet in 2007 and only 47 percent had a broadband connection at home, 37 today 96 percent use the internet and 79 percent have a broadband connection at home. 38 In addition, today approximately 35 EDGAR was first introduced as a concept more than 15 years after the Commission adopted short-form registration and more than a year after Form S-3’s adoption. See Electronic Filing, Processing and Information Dissemination System, Release No. 33-6519 (Mar. 22, 1984) [49 FR 12707 (Mar. 30, 1984)]. Even though EDGAR was introduced in the mid-1980s, issuers were not required to make their filings electronically on EDGAR until the mid-1990s, which was after the Commission last revisited the “One-Year Seasoning” requirement. The Commission, therefore, has not reassessed that requirement since EDGAR was in its infancy. 36 See Baby Shelf Adopting Release at 73536 (noting that “the technological advances that have revolutionized communications between companies and the market should allow us to ease the Form S–3 eligibility standards without undermining investor protection or the integrity of the markets” but “retaining public float as a factor in determining the extent of short-form eligibility” because “[t]echnology can facilitate and enhance market following, but it does not ensure it”). 37 John B. Horrigan & Aaron Smith, Home Broadband Adoption 2007, PEW RESEARCH CENTER (July 3, 2007), available at https://www.pewresearch.org/internet/2007/07/03/home-broadband-adoption-2007/. 38 Internet, Broadband Fact Sheet, PEW RESEARCH CENTER (Nov. 13, 2024), available at https://www.pewresearch.org/internet/fact-sheet/internet-broadband/. 19 91 percent of Americans own a smartphone compared to just 35 percent in 2011. 39 Thus, a greater number of investors can retrieve investment information from nearly anywhere and nearly anytime. Moreover, the Commission improved investor access to this information in 2019 by requiring active hyperlinks to information incorporated by reference into registration statements and prospectuses. 40 As a result, today’s investors can now more easily and rapidly access Commission filings on EDGAR and via issuer websites, as well as other issuer-related information that is available through other electronic channels, at significantly lower cost than in the past. 41 Because of the ease with which investors may obtain Exchange Act disclosure documents and other information about an issuer, we believe that eligibility to use Form S-3 and the Enhanced Registration and Communication Benefits should not depend on the extent of an issuer’s market following, including analyst coverage (e.g., by reference to its public float or initial Exchange Act seasoning). 42 Instead, we believe a more appropriate criterion is whether 39 Mobile Fact Sheet, PEW RESEARCH CENTER (Nov. 13, 2024), available at https://www.pewresearch.org/internet/fact-sheet/mobile/. 40 See 17 CFR 230.411(d); FAST Act Modernization and Simplification of Regulation S-K, Release No. 33-10618 (Mar. 20, 2019) [84 FR 12674 (Apr. 2, 2019)] as corrected by FAST Act Modernization and Simplification of Regulation S-K, Correction, Release No. 33-10618A (Aug. 6, 2019) [84 FR 13796 (Aug. 13, 2019)] (“FAST Act Adopting Release”). The Commission also has made it easier for the public to access EDGAR data by, for example, offering robust search features for EDGAR filings and making available Application Programing Interfaces (“APIs”) and Really Simple Syndication (“RSS”) feed options that can help investors stay current with filings made on EDGAR. See U.S. Securities and Exchange Commission, EDGAR Application Programming Interfaces (Last Reviewed or Updated April 8, 2025), available at https://www.sec.gov/searchfilings/edgar-application-programming-interfaces; U.S. Securities and Exchange Commission, Structured Disclosure RSS Feeds (Last Reviewed or Updated Jan. 21, 2026), available at https://www.sec.gov/dataresearch/structured-data/structured-disclosure-rss-feeds. Further, investors may use other websites to receive alerts when, for example, a company issues a press release or a media outlet publishes a news article about the company. 41 Sabrina Chi & Devin M. Shanthikumar, Do Retail Investors Use SEC Filings? Evidence from EDGAR Search (Oct. 25, 2018), available at https://ssrn.com/abstract=3281234 (finding that retail investor trading is significantly related to EDGAR searches for Form 10-K and Form 10-Q filings). 42 Cf. supra note 33 and accompanying text. 20 investors can readily obtain issuer-specific information that is incorporated by reference into a prospectus and the related registration statement to make an informed investment decision. If an issuer is current and timely with respect to its Exchange Act reporting obligations, then an investor’s ability to obtain such issuer-specific information will not depend on the length of the issuer’s Exchange Act reporting history or the amount of the issuer’s public float. In the preEDGAR era, it may have been important to include eligibility requirements for short-form registration that “assure[d] that sufficient information about registrants using the form [was] available to the investing public through the Exchange Act reporting system.” 43 Today, however, the public availability of all issuers’ Exchange Act reports in EDGAR effectively addresses the concerns that animated those requirements. We believe, therefore, that eligibility for Form S-3 and the Enhanced Registration and Communication Benefits no longer should be conditioned on an issuer’s Exchange Act reporting history, public float, or amount of registered debt issued. That said, consistent with the Commission’s investor protection mandate, we are not proposing to expand eligibility to use Form S-3 or the Enhanced Registration and Communication Benefits to all issuers. For example, under the proposed amendments, issuers would be eligible to use most of the Enhanced Registration and Communication Benefits only if they are eligible to use Form S-3 and are exchange-listed. Further, although use of Form S-3 would not be conditioned on an issuer having satisfied the One-Year Seasoning requirement under the proposed amendments, use of the form would be conditioned on an issuer being current and timely with respect to all the material required to be filed pursuant to sections 13(a), 14(a), 14(c), and 15(d) of the Exchange Act during the preceding 12 calendar months, or such 43 Adoption of Amendments to Registration Forms and Guide and Rescission of Registration Form, Release No. 33-5791 (Dec. 20, 1976) [41 FR 56301, 56302 (Dec. 28, 1976)] (“1976 Amendments to Forms S-7 and S-16”). 21 shorter period that the issuer was required to file such reports and materials. The proposed amendments also would prohibit issuers from using Form S-3 (and, therefore, the Enhanced Registration and Communication Benefits) if they are within a category of issuers we believe pose greater investor protection concerns, including those issuers that potentially present the highest risk of non-compliance with Securities Act and Exchange Act disclosure requirements. We discuss each of these aspects of the proposed amendments in more detail below. II. DISCUSSION OF PROPOSED AMENDMENTS A. Form S-3 We are proposing to amend Form S-3 to revise its eligibility requirements. In addition, we are proposing certain other amendments to Form S-3 that would simplify and modernize the form. Taken together, these proposed amendments are intended to allow a greater number of issuers the flexibility to access the public securities markets quickly by using Form S-3 while also ensuring that investors remain appropriately protected. Form S-3, as it would read under the proposed amendments, is attached to this release as Appendix B. 1. Background a. Eligibility to Use Form S-3 and Conduct Shelf Offerings Form S-3 is a short-form registration statement that eligible issuers can use to register offerings under the Securities Act. The ability to use Form S-3 can confer significant advantages on eligible companies seeking to raise capital through the public markets. Notably, an issuer that is Form S-3 eligible for primary offerings is permitted to conduct shelf offerings—that is, 22 offerings made on a delayed basis—under Rule 415. 44 Rule 415 provides issuers with considerable flexibility to access the public securities markets from time to time in response to changes in the market and the issuer’s capital needs. Issuers that are eligible to conduct shelf offerings under Rule 415 are permitted to register securities offerings prior to planning any specific offering and, once the registration statement is effective, issue securities in one or more offerings without waiting for further Commission or staff action. By having more control over the timing of their offerings, eligible issuers can take advantage of desirable market conditions, thus allowing them to raise capital on more favorable terms (such as a higher equity price or lower debt interest rate). As a result, the ability to sell securities “off the shelf” as needed gives issuers a financing alternative that may be more advantageous for them than other available methods, such as private placements with securities priced at discounted values based in part on their relative illiquidity. One of the primary advantages of Form S-3 is the ability to omit from the prospectus included in a registration statement at the time of effectiveness (the “base prospectus”) certain information, including, for WKSIs, information as to whether an offering is a primary or secondary offering, the plan of distribution for the securities, a description of the securities to be offered other than an identification of the name or class of such securities, and the identification of other issuers. 45 An issuer can instead provide this information at the time that it is actually 44 Rule 415(a) provides that “[s]ecurities may be registered for an offering to be made on a continuous or delayed basis in the future, Provided, That: (1) the registration statement pertains only to: . . . (x) Securities registered (or qualified to be registered) on Form S-3 or Form F-3 which are to be offered and sold on an immediate, continuous or delayed basis by or on behalf of the registrant, a majority owned subsidiary of the registrant or a person of which the registrant is a majority-owned subsidiary.” 17 CFR 230.415(a). Offerings under 17 CFR 230.415(a)(1)(x) (“Rule 415(a)(1)(x)”) are referred to as “shelf offerings” because securities can be offered (or “taken down” from the shelf registration statement) over time and from time to time. As noted above, for purposes of this release, the term “shelf offering” is intended to refer to an offering made on a delayed basis. 45 See 17 CFR 230.430B(a). 23 conducting an offering, after its terms have been determined. The ability to omit information from the base prospectus at the time of effectiveness, therefore, enables issuers to conduct shelf offerings. In addition, Form S-3 permits the required information to be backward and forward incorporated by reference to a company’s disclosure in its Exchange Act filings. The ability to forward incorporate allows for automatic updating of the registration statement. 46 By contrast, a company without the ability to forward incorporate must file a prospectus supplement to update information or, in certain cases, file a post-effective amendment to its registration statement to prevent information in the registration statement from becoming outdated and to update for fundamental changes to the information set forth in the registration statement. 47 Issuers that are ineligible to file on Form S-3 often register their offerings on Form S-1, which has far fewer eligibility requirements than Form S-3. 48 Issuers filing registration statements on Form S-1 are not permitted to register shelf offerings under Rule 415 and therefore cannot register securities in advance of an actual offering. Thus, as compared to conducting a shelf offering on Form S-3, it is more challenging (and, in some instances, likely not feasible) for Form S-1 registrants to take advantage of favorable market opportunities, as they must prepare and file a registration statement at the time of an expected offering and await Commission or staff action before offering or selling securities. Further, Form S-1 permits certain issuers to backward incorporate. Form S-1 currently does not, however, permit issuers other than SRCs to 46 See 17 CFR 229.512(a)(1)(B). 47 See 17 CFR 229.512(a)(1). 48 See General Instruction I of Form S-1 (“This Form shall be used for the registration under the [Securities Act] . . . of securities of all registrants for which no other form is authorized or prescribed, except that this Form shall not be used for securities of foreign governments or political subdivisions thereof or asset-backed securities, as defined in 17 CFR 229.1101(c).”). Form S-3 has more extensive registrant and transaction requirements, as discussed infra notes 50-64 and accompanying text. 24 forward incorporate, which therefore requires a company to update the registration statement through prospectus supplements and post-effective amendments. 49 To use Form S-3, an issuer must meet the form’s registrant requirements, 50 which generally pertain to the issuer’s reporting history under the Exchange Act, as well as at least one of the form’s transaction requirements. 51 Form S-3’s registrant requirements (which are enumerated in General Instruction I.A of Form S-3) specify that to use the form, an issuer must satisfy each of the following: • U.S. Issuer. The issuer must be organized under the laws of the United States or any State or territory or the District of Columbia and have its principal business operations in the United States or its territories. 52 • Exchange Act Reporting. The issuer must have a class of securities registered pursuant to section 12(b) or 12(g) of the Exchange Act or be required to file reports pursuant to section 15(d) of the Exchange Act. 53 • One-Year Seasoning. The issuer must have been subject to the requirements of section 12 or 15(d) of the Exchange Act for a period of at least 12 calendar months immediately preceding the filing of the registration statement. 54 49 As discussed in more detail in section II.C below, the proposed amendments would permit other issuers using Form S-1 (i.e., not just SRCs) to forward incorporate. 50 See Form S-3, General Instruction I.A. 51 See Form S-3, General Instruction I.B. 52 See Form S-3, General Instruction I.A.1. 53 See Form S-3, General Instruction I.A.2. 54 See Form S-3, General Instruction I.A.3(a). 25 • Current in Exchange Act Reporting. The issuer must have filed all the material required to be filed pursuant to section 13, 14, or 15(d) of the Exchange Act for a period of at least 12 calendar months immediately preceding the filing of the registration statement. 55 • Timely in Exchange Act Reporting. The issuer must have filed in a timely manner all reports required to be filed during the 12 calendar months and any portion of a month immediately preceding the filing of the registration statement, other than specified reports on Form 8-K. 56 • Certain Failures to Make Payments and Defaults. The issuer must have not, since the end of the last fiscal year for which certified financial statements of the issuer and its consolidated subsidiaries were included in a report filed pursuant to section 13(a) or 15(d) of the Exchange Act: (a) failed to pay any dividend or sinking fund installment on preferred stock; or (b) defaulted (i) on any installment or installments on indebtedness for borrowed money, or (ii) on any rental on one or more long-term leases, which defaults in the aggregate are material to the financial position of the issuer and its consolidated and unconsolidated subsidiaries, taken as a whole. 57 • Electronic Filings. The issuer must have filed with the Commission all required electronic filings. 58 55 See id. General Instruction I.A.3(b) of Form S-3 specifies that an issuer must be timely in its Exchange Act reports “during the twelve calendar months and any portion of a month immediately preceding the filing of the registration statement.” As an illustration of how that measurement period functions, an issuer intending to file a Form S-3 on July 19, 2026 would have to have been current and timely with respect to its Exchange Act filings, other than specified reports on Form 8-K, from July 1, 2025 through July 19, 2026. 56 See Form S-3, General Instruction I.A.3(b). 57 See Form S-3, General Instruction I.A.4. 58 See Form S-3, General Instruction I.A.7(a). 26 • Interactive Data Files. The issuer must have submitted electronically to the Commission all Interactive Data Files 59 required to be submitted pursuant to 17 CFR 232.405 during the 12 calendar months and any portion of a month immediately preceding the filing of the registration statement on Form S-3 (or for such shorter period of time that the issuer was required to submit such files). 60 Foreign issuers, other than foreign governments, also can use Form S-3 if they satisfy all the registrant requirements, other than the “U.S. Issuer” eligibility requirement, and file the same Exchange Act reports as a domestic issuer. 61 In addition, successor issuers are permitted to use Form S-3 if they meet certain conditions. 62 Form S-3’s transaction requirements (which are enumerated in General Instruction I.B of Form S-3) specify that the form can be used for primary offerings only under the following circumstances: • General Instruction I.B.1 – Primary Offerings by Certain Registrants. An issuer may register any primary offering of its securities on the form if, among other requirements, the issuer’s public float is $75 million or more. • If an issuer does not have a public float of at least $75 million, it may nevertheless register the following primary offerings on Form S-3: 59 17 CFR 232.11 defines Interactive Data File as “the machine-readable computer code that presents information in eXtensible Business Reporting Language (XBRL) electronic format pursuant to § 232.405 and as specified by the EDGAR Filer Manual.” 60 See Form S-3, General Instruction I.A.7(b). 61 See Form S-3, General Instruction I.A.5. 62 See Form S-3, General Instruction I.A.6. Specifically, successor issuers may use Form S-3 if: (a) the issuer’s predecessor and the successor issuer, taken together, meet the registrant requirements, and the succession was primarily for the purpose of changing the state of incorporation of the predecessor or forming a holding company and the assets and liabilities of the successor at the time of succession were substantially the same as those of the predecessor; or (b) if all predecessors met the conditions at the time of succession and the successor issuer has continued to do so since the succession. See id. 27 o General Instruction I.B.2 – Primary Offerings of Non-Convertible Securities Other than Common Equity. An issuer may register a primary offering of nonconvertible securities other than common equity, provided the issuer: (1) has issued at least $1 billion in non-convertible securities, other than common equity, in primary offerings for cash registered under the Securities Act over the prior three years; (2) has outstanding at least $750 million of non-convertible securities, other than common equity, issued in primary offerings for cash registered under the Securities Act; (3) is a wholly-owned subsidiary of a WKSI; or (4) is a majority-owned operating partnership of a real estate investment trust (“REIT”) that qualifies as a WKSI. o General Instruction I.B.4 – Rights Offerings, Dividend or Interest Reinvestment Plans, and Conversions or Warrants and Options. An issuer may register securities to be offered upon exercise of outstanding rights, under a dividend or interest reinvestment plan, or upon the conversion of outstanding convertible securities or the exercise of outstanding warrants or options, if certain conditions are met. o General Instruction I.B.6 – Limited Primary Offerings by Certain Other Registrants. An issuer that is not a shell company may register any primary offering if it is exchange-listed and the aggregate market value of securities sold by or on behalf of the issuer under the instruction during the 12 months immediately prior to, and including, the sale is no more than one-third of the issuer’s public float. 28 Form S-3’s transaction requirements specify that the form can be used for resale offerings only under the following circumstances: • General Instruction I.B.1 – Primary Offerings by Certain Registrants. 63 An issuer may register resales of outstanding securities if the issuer has a public float of at least $75 million. • General Instruction I.B.3 – Transactions Involving Secondary Offerings. If an issuer does not have a public float of at least $75 million, resales of outstanding securities can be registered on Form S-3 if the securities are listed on a national securities exchange or quoted on the automated quotation system of a national securities association. 64 In addition, General Instruction I.B.5 provides that Form S-3 may not be used to register offerings of asset-backed securities, as defined in 17 CFR 229.1101(c). Finally, Form S-3 has instructions that specify circumstances under which certain subsidiaries are eligible to use the form. 65 In addition to the permissible offerings by subsidiaries identified in General Instruction I.B.2 (with respect to wholly-owned subsidiaries of WKSIs and majority-owned operating partnerships of REITs that qualify as WKSIs), General Instruction I.C provides that majority-owned subsidiaries may register certain offerings on Form S-3 if: 63 Although General Instruction I.B.1 is titled “Primary Offerings by Certain Registrants,” the instruction, in addition to permitting primary offerings, permits registration of “outstanding securities to be offered for cash for the account of any person other than the registrant” if the issuer’s public float is $75 million or more. 64 The reference in General Instruction I.B.3 to securities being “quoted on the automated quotation system of a national securities association” is a reference to The Nasdaq Stock Market LLC (“Nasdaq”) before Nasdaq became a national securities exchange. Because Nasdaq is now a national securities exchange, this language has no effect. Accordingly, a class of securities to be offered in reliance on General Instruction I.B.3 must be listed on a national securities exchange. 65 The definition of WKSI under 17 CFR 230.405 (“Rule 405”) also allows majority-owned subsidiaries of WKSIs to be treated as WKSIs for purposes of certain offerings. We discuss the WKSI status of these issuers and our related proposed amendments in section II.B below. 29 • the issuer-subsidiary itself meets the registrant requirements and the applicable transaction requirement; 66 • the parent of the issuer-subsidiary meets the registrant requirements and the conditions of General Instruction I.B.2 are met; 67 • the parent of the issuer-subsidiary meets the registrant requirements and the applicable transaction requirement, and provides a full and unconditional guarantee, as defined in 17 CFR 210.3-10 (“Rule 3-10 of Regulation S-X”), of the payment obligations on the securities being registered, and the securities being registered are non-convertible securities, other than common equity; 68 • the parent of the issuer-subsidiary meets the registrant requirements and the applicable transaction requirement, and the securities of the issuer-subsidiary being registered are full and unconditional guarantees, as defined in Rule 3-10 of Regulation S-X, of the payment obligations on the parent’s non-convertible securities, other than common equity, being registered; 69 or • the parent of the issuer-subsidiary meets the registrant requirements and the applicable transaction requirement, and the securities of the issuer-subsidiary being registered are guarantees of the payment obligations on the non-convertible securities, other than common equity, being registered by another majority-owned subsidiary of the parent 66 See Form S-3, General Instruction I.C.1. 67 See Form S-3, General Instruction I.C.2. 68 See Form S-3, General Instruction I.C.3. 69 See Form S-3, General Instruction I.C.4. 30 where the parent provides a full and unconditional guarantee, as defined in Rule 3-10 of Regulation S-X, of such non-convertible securities. 70 For convenience, throughout the remainder of this release, we refer to the offerings involving parent or subsidiary guarantees permitted under General Instructions I.C.3, I.C.4, and I.C.5 as “Guarantee-Related Offerings.” b. History of Short-Form Registration The Commission first introduced short-form registration “in the nature of an experiment” with Form S-7 in 1967. 71 Unlike other forms, Form S-7 permitted eligible issuers to omit certain information about the issuer, such as property descriptions, pending legal proceedings, and director and executive compensation. To use the form, issuers had to have a class of equity securities registered under section 12(b) or (g) of the Exchange Act and had to be current and timely in their Exchange Act reporting for at least five years. 72 Issuers also had to satisfy other qualitative criteria related to business continuity, 73 board stability, 74 solvency, 75 financial 70 See Form S-3, General Instruction I.C.5. 71 Adoption of Short Form for Registration of Securities of Certain Issuers and Amendment of Rule 174, Release No. 33-4886 (Nov. 29, 1967) [32 FR 17933 (Dec. 15, 1967)] (“Form S-7 Release”). The Commission had previously adopted a registration statement designated Form S-7 in 1947 to be used by the International Bank of Reconstruction and Development. See Adoption of Form S-7, Release No. 33-3238 (July 8, 1947) [12 FR 4531 (July 10, 1947)]. This form was rescinded in 1950. See Bretton Woods Agreement, Release No. 33-3364 (Jan. 9, 1950) [15 FR 280 (Jan. 17, 1950)]. 72 Form S-7 was available to listed issuers with a class of common equity securities registered under section 12(b) and unlisted domestic issuers that had a class of equity securities registered under section 12(g). See Form S-7 Release. 73 The registrant was required to have been engaged in business of substantially the same general character since the beginning of the last five fiscal years. 74 The issuer’s board of directors had to have been directors of the registrant during each of the last three fiscal years. 75 The issuer and its subsidiaries could not have, during the prior 10 years, defaulted in the payment of any dividend or sinking fund installment on preferred stock, or in the payment of any principal, interest, or sinking fund installment on any indebtedness for borrowed money, or in the payment of rentals under long term leases. 31 performance, 76 and dividend coverage. 77 The rationale for this short-form registration statement was that the omitted information was already available through the issuer’s Exchange Act reports, making its inclusion in the registration statement unnecessary. 78 Over time, the Commission has periodically amended its rules and forms to broaden the availability of short-form registration and shelf offerings. In the Commission’s 1969 Disclosure Policy Study led by Commissioner Francis Wheat (often referred to as the “Wheat Report”), the Commission recommended a “substantial expansion” of short-form registration. 79 In response, the Commission broadened short-form eligibility by decreasing Form S-7’s five-year Exchange Act reporting requirement to three years and eliminating or easing certain qualitative criteria. 80 That same year, the Commission further expanded short-form registration by adopting Form S-16, which increased the scope of offerings available to issuers eligible to use Form S-7. 81 76 The issuer and its consolidated subsidiaries had to have had sales or gross revenues of at least $50 million for the prior fiscal year and a net income, after taxes but before extraordinary items net of tax effect, of at least $2.5 million for the prior fiscal year, and of at least $1 million for each of the preceding four fiscal years. 77 If the securities to be registered were common stock or securities convertible into common stock, the issuer had to have earned in each of the prior five fiscal years any dividends paid in each such year on all classes of securities. In addition, if the issuer paid a stock dividend in any of such fiscal years, the aggregate amount transferred from surplus to capital in respect of each such dividend had to have been charged only to the earned surplus account and been equal to the aggregate fair market value of the stock issued as such dividend. 78 See Form S-7 Release (noting that “[t]he form represents a closer integration of the requirements of the [Securities Act] and the [Exchange Act]” and that “prospectuses and registration statements on this form will be substantially shorter than heretofore and will, therefore, be substantially easier both for the issuer to prepare and for the Commission to process”). 79 FRANCIS M. WHEAT, DISCLOSURE TO INVESTORS - A REAPPRAISAL OF ADMINISTRATIVE POLICIES UNDER THE ’33 AND ’34 SECURITIES ACTS, at 67–68 (1969), available at https://www.sechistorical.org/museum/galleries/tbi/gogo_d.php. 80 See Adoption of Amendments to Form S-7, Release No. 33-5100 (Nov. 12, 1970) [35 FR 228 (Nov. 24, 1970)]. Specifically, the Commission eliminated the business continuity requirement and eased the board stability requirement (by specifying that a majority of the existing board must have been directors of the issuer or a predecessor for each of the last three, rather than five, fiscal years) and the financial performance requirement (eliminating the requirement to have had gross revenues of at least $50 million for the prior fiscal year and replacing the requirement to have had net income of at least $2.5 million in the last fiscal year and $1 million for each of the last five fiscal years with a requirement to have had net income of $500,000 in each of the last five fiscal years). 81 See Adoption of Form S-16 for Registration of Securities to be Offered in Specified Transactions and Amendment of Rules 427 and 429, Release No. 33-5117 (Dec. 23, 1970) [36 FR 777 (Jan. 16, 1971)]. 32 Specifically, Form S-16 allowed these issuers to register secondary offerings of securities listed on a national securities exchange, conversions of convertible securities, and warrant exercises. 82 Unlike Form S-7, Form S-16 allowed incorporation by reference of an issuer’s Exchange Act reports, including forward incorporation, and required fewer disclosures. 83 In 1976, the Commission again amended Form S-7 to extend its availability—and, by extension, that of Form S-16—to a larger number of issuers. 84 The amendments made Form S-7 available to issuers with a class of debt securities registered under section 12(b) as well as issuers with a section 15(d) reporting obligation. They also permitted use by successor issuers and certain majority-owned subsidiaries of Form S-7 eligible parents, while broadening eligibility by reducing the Exchange Act reporting timeliness requirement from three years to one year. In addition, the amendments eliminated the board stability and dividend coverage requirements and eased the financial performance requirement. 85 The Commission also retained certain safeguards—including the requirement that issuers have filed all Exchange Act reports for 36 months—“to assure that sufficient information about registrants using the form is available to the investing public through the Exchange Act reporting system.” 86 In 1978, the Commission further expanded the scope of short-form registration by amending Form S-16 to permit primary cash underwritten offerings by any Form S-7 eligible issuer with a public float of at least $50 million. 87 The amendments also allowed offerings by 82 See id. 83 See id. 84 See 1976 Amendments to Forms S-7 and S-16. 85 See supra notes 73-77 and accompanying text for a description of the qualitative issuer requirements of Form S7. The amendments also made Form S-7 available for certain exchange offers. See 1976 Amendments to Forms S-7 and S-16. 86 Id. 87 1978 Amendments to Short-Form Registration. 33 majority-owned subsidiaries whose securities were fully and unconditionally guaranteed by a parent meeting the $50 million public float threshold. The Commission characterized these amendments as “extremely important,” noting that they were expected to “reduce registration costs and thus the costs of raising capital, facilitate timely access to the capital markets, make more meaningful the periodic reporting requirements of the Exchange Act and eliminate needless duplication of disclosure which results in increased costs to investors.” 88 At the same time, the Commission explained that the $50 million public float requirement was intended to limit eligibility to “a small top tier of companies . . . which usually provide high quality corporate communication documents, including [Exchange] Act reports, and whose corporate information is widely disseminated because members of this class of registrants are widely followed by debt and equity analysts.” 89 In 1982, the Commission replaced Forms S-7 and S-16 with Forms S-2 and S-3 as part of adopting the “integrated disclosure system.” 90 Form S-2 allowed any issuer that had been an Exchange Act reporting company for at least 36 months (and had timely filed its reports during the prior 12 calendar months) to register any transaction, other than an exchange offer, on a 88 Id. at 16673. 89 Id. (internal quotation marks omitted) (quoting The Report of the Advisory Committee on Corporate Disclosure to the Securities and Exchange Commission (Nov. 3, 1977), Committee Print 95-29, House Committee on Interstate and Foreign Commerce, 95th Cong., 1st Sess.). With respect to the $50 million public float requirement in particular, the Commission stated that “this requirement will provide some assurance that, in addition to wide dissemination of information about such companies in the market place, securities analysts will follow companies of this size.” Id. Although the Commission recognized that “[t]he lack of interest of securities professionals in a company does not mean necessarily that information about that company is not readily available or that the public information is of inferior quality,” it further noted that “professional interest should help assure market reaction to material information about a company and thereby alleviate the need to provide the information directly to offerees when securities are registered on Form S-16 for a primary offering.” Id. 90 Adoption of Integrated Disclosure System, Release No. 33-6383 (Mar. 3, 1982) [47 FR 11380 (Mar. 16, 1982)] (“Integrated Disclosure Adopting Release”) (implementing an integrated disclosure system by, among other things, “expan[ding] and reorganiz[ing] . . . Regulation S-K as the repository for the uniform disclosure requirements of documents filed with the Commission under the Securities Act and the [Exchange Act]”). 34 short-form basis. 91 Similar to Form S-7, instead of providing all required disclosures directly in the prospectus, issuers that qualified to use the form could choose to either (i) deliver a copy of the annual report to security holders with the prospectus or (ii) present issuer-oriented information comparable to that required to be included in such annual report in the prospectus. In either case, the more complete issuer information required by the form was incorporated by reference into the prospectus from the issuer’s most recent annual report on Form 10-K. Form S2 did not permit forward incorporation; accordingly, updating amendments (which required Commission or staff action to become effective) had to be filed for ongoing offerings. 92 As initially adopted, Form S-3 permitted registration of any primary or secondary offering if the issuer had, among other requirements: (1) been subject to Exchange Act reporting for at least 36 months; (2) timely filed its Exchange Act reports for the 12 months prior to filing the registration statement; and (3) at least $150 million in public float, or, alternatively, at least $100 million in public float if the annual trading volume of such stock was at least three million shares. 93 An issuer also could register certain specific transactions on Form S-3 without regard to public float, including primary offerings of investment grade non-convertible debt or preferred 91 The Commission initially sought public comment on whether to add a market criterion, such as public float, as a condition of Form S-2 eligibility. See Proposed Comprehensive Revision to System for Registration of Securities Offerings, Release No. 33-6235 (Sept. 2, 1980) [45 FR 63693 (Sept. 25, 1980)] (“1980 Proposed Revisions”). The Commission determined not to move forward with such a requirement, stating that although it “believes such criteria, which ensure adequate information dissemination, are necessary where, as in the case of an offering on Form S-3, much of the underlying disclosure is not delivered . . . , with Form S-2 there is delivery of the basic disclosure documents and therefore the Commission believes that requirement can be deleted.” 1981 Reproposal at 41912. 92 The Commission rescinded Form S-2 in 2005 because requiring physical delivery of Exchange Act reports had “become outdated in view of the introduction of EDGAR, other technological developments, and the rapid dissemination of information in the market.” Securities Offering Reform Adopting Release at 44782. The Commission also stated that Form S-2 had become “superfluous” in light of concurrent amendments to Form S1 that allowed certain Exchange Act reporting issuers to incorporate by reference into Form S-1 information from previously filed Exchange Act reports and documents. Id. 93 See Integrated Disclosure Adopting Release. 35 stock, secondary offerings of a class of securities listed on a national securities exchange or quoted on the Nasdaq interdealer quotation system, rights offerings to shareholders, offerings of securities issuable upon exercise of warrants or upon conversion of other outstanding securities, and offerings pursuant to dividend and interest reinvestment plans. 94 The Commission adopted Form S-3 “in reliance on the efficient market theory,” 95 with registrant and transaction requirements designed to “relat[e] short-form registration to the existence of widespread following in the marketplace.” 96 Based on commenter input, the Commission explained that “a test based on the registrant’s [public] float . . . is an appropriate measure of marketplace following” and determined that “a [public] float of $150 million is the appropriate level at which short-form registration should be allowed.” 97 c. History of Shelf Registration At the same time it adopted Forms S-2 and S-3 in 1982, the Commission also adopted Rule 415 as a “temporary rule.” 98 Rule 415 conditionally permitted shelf registration and codified Commission staff practice that had informally permitted shelf registration prior to that time. 99 The Commission permanently adopted Rule 415 in 1983 after it concluded that the rule 94 Id. 95 Id. at 11382. 96 Id. at 11384. 97 Id. 98 See id. at 11394. 99 This staff practice was set forth in a release commonly referred to as “Guide 4,” which was published in 1968. See Guides for Preparation and Filing of Registration Statements, Release No. 33-4936 (Dec. 9, 1968) [33 FR 18617 (Dec. 17, 1968)]. Guide 4 set forth the Division of Corporation Finance’s view that the last sentence of section 6(a) of the Securities Act, 15 U.S.C. 77f(a) (“A registration statement shall be deemed effective only as to the securities specified therein as proposed to be offered.”), prohibited “securities [to] be registered if there is no intention to offer them within the proximate future.” Id. Guide 4 also set forth the Division’s view that “[t]here are, however, certain types of deferred or extended offerings for which registration is permitted or required” (e.g., when the issuer proposed to engage in a continuing acquisition program or in the case of securities underlying exercisable options, warrants, or rights). Id. 36 “has operated efficiently and has provided registrants with important benefits in their financings, most notably cost savings.” 100 In doing so, the Commission acknowledged commenters’ concerns regarding the “adequacy of disclosure and due diligence” 101 and addressed those concerns by “limiting the Rule to primary offerings of securities qualified to be registered on Form S-3 or F-3 and to traditional shelf offerings.” 102 The Commission noted that “[t]he integrated disclosure system addresses concerns about the quality and timeliness of disclosure by ensuring that the marketplace is provided with a continuous stream of high quality corporate information about registrants widely followed in the marketplace.” 103 The Commission further stated that “[f]or registrants not eligible to use short form registration, . . . concerns about disclosure and due diligence outweigh the benefits of Rule 415.” 104 In 1992, the Commission amended Form S-3 to make it and, by extension, shelf registration, available to a broader group of issuers and classes of transactions. 105 It increased the 100 Shelf Registration Adopting Release at 52890 (“The cost savings are attributable to a number of factors, including flexibility to respond to rapidly changing markets, reduced legal, accounting, printing and other expenses and increased competition among underwriters.”). 101 Id. at 52890. With respect to adequacy of disclosure, commenters “question[ed] the amount and quality of information available, as well as whether investors receive it in time to make investment decisions” and “express[ed] concern that [Rule 415] contributes to deficiencies in the disclosure provided to investors caused, in great part, by short form registration statements.” Id. at 52892. With respect to due diligence, commenters “attribute[d] concerns . . . largely to fast time schedules” associated with shelf offerings under Rule 415. Id. at 52892-93. 102 Id. at 52890. Commenters also expressed concerns about the “institutionalization of the securities markets, impact on retail distribution, increased concentration in the securities industry, [and] effects on the secondary markets.” Id. at 52893. The Commission noted, however, that these concerns “relate to economic factors, such as volatile interest rates and other market forces, which exist apart from Rule 415 and thus are not appropriate bases on which to take action on the Rule.” Id. 103 Id. With respect to registrants not eligible to use short-form registration, “[t]he Commission also note[d] that shelf registration may not be as advantageous for such registrants because they cannot rely on subsequently filed Exchange Act reports for certain updating of the information in the shelf registration statement.” Id. at 52893-94. 104 Id. 105 Simplification of Registration Procedures for Primary Securities Offerings, Release No. 33-6964 (Oct. 22, 1992) [57 FR 48970 (Oct. 29, 1992)] (“1992 Adopting Release”). 37 pool of eligible issuers by shortening the requisite Exchange Act reporting history from 36 to 12 months for most issuers and reducing the public float requirement from $150 million to $75 million.106 In proposing these amendments, the Commission cited the success of Form S-3 and the integrated disclosure system over the previous 10 years, which had “achieved their intended effects of providing issuers efficient access to the public securities markets without compromising investor protection” and “improvement in the quality of ongoing Exchange Act reporting.” 107 Among other things, the Commission noted that the amendments “would provide significant cost savings, efficiency and flexibility for many issuers” and, with respect to the expanded access to shelf registration, “allow[] significantly greater numbers of issuers the flexibility to access the public securities markets on demand without having to obtain additional clearance from the Commission’s staff,” which would “remove unnecessary regulatory obstacles to capital raising.” 108 The 1992 amendments also permitted shelf registration of debt, equity, and other securities on an unallocated basis and provided for immediate effectiveness of Form S-3 registration statements for dividend and interest reinvestment plans. 109 The Commission suggested that unallocated offerings may promote greater use of shelf offerings, especially for common stock offerings. In this regard, the Commission noted “[t]he limited use of shelf 106 The Commission also eliminated the alternative test of $100 million public float with annual trading volume of three million shares because this test became unnecessary due to the lower $75 million public float threshold. 107 Simplification of Registration Procedures for Primary Securities Offerings, Release No. 33-6943 (July 16, 1992) [57 FR 32461, 32463 (July 22, 1992)] (“1992 Proposing Release”). 108 1992 Adopting Release at 48971. 109 In an unallocated shelf offering, an issuer is permitted to disclose the various types and categories of securities (both debt and equity) covered by the registration statement without assigning a specific dollar amount to each category to be offered. In such offering, the registration statement lists the types of securities covered and the prospectus supplement filed in connection with a “takedown” offering from the shelf registration statement specifies the amount of the particular security being offered. 38 registration for common stock,” which it attributed to “concerns by registrants about the market effects from the overhang created by such registration, as well [as] concerns that the market would view even a registration statement for possible future sales of common stock as signaling management’s view that the price of the stock has reached a peak.” 110 The Commission addressed these concerns by allowing issuers to identify the types of securities covered by the registration statement without having to identify the specific amount (either number of shares or dollar amount) of each category to be offered (these registration statements are commonly referred to as “universal shelf registration statements”). The Commission further liberalized the shelf registration process in several ways in a 2005 rulemaking titled “Securities Offering Reform.” 111 First, the Commission permitted a new category of issuers, referred to as WKSIs, greater flexibility in registering their securities offerings by allowing them to file shelf registration statements on Form S-3 that are automatically effective upon filing with the Commission. 112 Second, the Commission adopted rules allowing WKSIs using automatic shelf registration statements to pay filing fees at any time (i.e., either in advance of a takedown or on a “pay-as-you-go” basis at the time of each takedown). 113 The “pay-as-you-go” model enabled WKSIs to file shelf registration statements without specifying a total dollar amount of securities to be offered. Third, the Commission 110 1992 Proposing Release at 32466. “Overhang” generally refers to potential downward pressure on an issuer’s stock price that may occur when an issuer signals a willingness to sell securities in the future by filing a shelf registration statement and investors fear future dilution stemming from future issuances. See, e.g., Mary C. Neary, SEC Rule 415: Resolving the Dilemma of Shelf Registrations Creates Problems of Its Own, 3 PACE L. REV. 275, 300 (1983) (“[N]ot knowing when a large block of stock will be sold from the shelf, or the date, underwriter, or timing of future offerings, creates what is known as an ‘overhang’ problem, and intensifies the downward pressure, effectively placing a lid on the stock price.”). 111 See Securities Offering Reform Adopting Release. 112 See 17 CFR 230.462(e); 17 CFR 239.13(d). The term “WKSI” and the benefits currently reserved for these issuers are discussed in greater detail in section II.B below. 113 See 17 CFR 230.456(b). 39 eliminated a provision in Rule 415 that limited the amount of securities that could be registered for certain primary offerings on Form S-3 to an amount reasonably expected to be offered and sold within two years. 114 Fourth, WKSIs were permitted to add new classes of securities or securities of an eligible subsidiary to an already effective automatic shelf registration statement by post-effective amendment. 115 Finally, the amendments eliminated certain limitations imposed on ATM offerings by seasoned issuers. 116 To further enhance issuers’ access to the public markets, the Commission in 2007 again amended the eligibility requirements of Form S-3. 117 These amendments allowed an even greater number of issuers to conduct primary securities offerings on the form, and, in turn, to conduct shelf offerings. Significantly, under these amendments, an issuer could use Form S-3 to conduct primary shelf offerings without regard to the size of its public float or the rating of its debt to be offered if it satisfied the form’s registrant requirements, was not a shell company, was exchangelisted, and did not sell more than the equivalent of one-third of its public float in primary offerings over any period of 12 calendar months. In further extending Form S-3 eligibility to a broader group of issuers and allowing the use of Form S-3 without regard to an issuer’s public float, the Commission stated its “belie[f] that extending Form S-3 short-form registration to additional issuers should enhance their ability to access the public securities markets.” 118 The Commission also noted “that such a measure 114 See Securities Offering Reform Adopting Release at 44774-75. 115 See 17 CFR 230.413(b). In general, securities cannot be added to an effective registration statement. See 17 CFR 230.413(a). 116 Specifically, the Commission eliminated a requirement that ATM offerings involve an underwriter and a requirement that an ATM offering not exceed 10% of the issuer’s public float if the offering related to voting stock. 117 See Baby Shelf Adopting Release. 118 Id. at 73535. 40 would greatly enhance smaller public companies’ access to capital in the securities markets, with far less burden and cost.” 119 In adopting these amendments, the Commission emphasized “the great advances in the electronic dissemination and accessibility of company disclosure transmitted over the Internet in the last several years.” 120 The Commission, therefore, was “persuaded that the technological advances that have revolutionized communications between companies and the market should allow us to ease the Form S-3 eligibility standards without undermining investor protection or the integrity of the markets.” 121 Nonetheless, the Commission stated that it was not prepared at that time “to allow unlimited use of this form for primary offerings by companies who do not have at least $75 million in public float.” 122 In that regard, the Commission noted certain concerns related to allowing smaller public companies to use shelf registration. Those concerns included “that the securities of smaller public companies are comparatively more vulnerable to price manipulation than the securities of larger public companies, and may also be more prone to financial reporting error and abuses” and “that the disclosure obligations and liability imposed by the federal securities laws on smaller public companies are comparable, but not identical, to the largest reporting companies.” 123 119 Id. 120 Id. 121 Id. at 73536. 122 Id. at 73535. 123 Id. at 73536. In addition, although the Commission cited certain technological advances as a reason for expanding Form S-3 eligibility, it also explained that “[w]hile current technology provides investors with access to information about publicly reporting companies at an unprecedented level of ease and speed, it does not guarantee that the market has fully absorbed and synthesized all of the available information of a given company” and that “[t]echnology can facilitate and enhance market following, but it does not ensure it.” Id. 41 In part due to those concerns, the Commission stated that only a “modest expansion of Form S-3 . . . eligibility” was warranted at that time. 124 The Commission further explained, however, that it “may revisit the appropriateness of the form restrictions at a later time if our experience with this revised requirement suggests issuer eligibility for primary offerings on Form S-3 . . . should be further revised.” 125 The Commission has not further expanded shelf offerings or Form S-3 eligibility since 2007. d. Public Views on Expanding Form S-3 Eligibility Over the years, some market participants have advocated for expanding Form S-3 eligibility to reduce compliance costs in connection with registered offerings and to promote capital formation. Those commentators have proposed different methods for accomplishing this objective. For example, in 2006, the Commission’s Advisory Committee on Smaller Public Companies recommended allowing all Exchange Act reporting companies that had been reporting for at least one year and were listed on a national securities exchange or quoted in the over-the-counter market to use Form S-3. 126 In response to a 2011 Commission proposing release, one commenter recommended eliminating Form S-3’s transaction requirements and permitting its use by issuers that had reliably filed Exchange Act reports for at least one year. 127 124 Id. at 73534. 125 Id. 126 Recommendation IV.P.3. of the Final Report of the Advisory Committee on Smaller Public Companies (Apr. 23, 2006), at 68-72 (“[W]e recommend that the efficiencies associated with the use of Form S-3 be made available to all companies that have been reporting under the Exchange Act for at least one year, and are current in their Exchange Act reporting at the time of filing. Additionally, we recommend elimination of the current condition to the use of Form S-3 that the issuer has timely filed all required reports in the last year.”), available at http://www.sec.gov/info/smallbus/acspc/acspc-finalreport.pdf. 127 See letter in response to Security Ratings, Release No. 33-9186 (Feb. 9, 2011) [76 FR 8946 (Feb. 16, 2011)] (“Security Ratings Proposing Release”) from Securities Industry and Financial Markets Association (Mar. 18, 2011). 42 Participants at the Commission’s 2012 Government-Business Forum on Small Business Capital Formation recommended permitting “all public companies (regardless of public float or exchange-traded status) to utilize Form S-3 for primary and secondary offerings” or eliminating the one-third limit under General Instruction I.B.6 for exchange-listed issuers. 128 In 2015, another commentator supported making Form S-3 available to any issuer current in its Exchange Act reporting obligations, regardless of public float. 129 At the “Small Cap Policy Roundtable: Reassessing the Framework for Small Public Companies” hosted by the Commission’s Office of the Advocate for Small Business Capital Formation, some participants recommended reconsideration of: (1) the One-Year Seasoning requirement and the requirement to have a Form 10-K on file to use Form S-3; (2) the $75 million public float requirement in General Instruction I.B.1 and raising the related one-third limit in General Instruction I.B.6; (3) whether failing to file a Form 8-K should result in a 12-month ineligibility to use Form S-3; and (4) whether it makes sense to lose Form S-3 eligibility over a limited omission of XBRL tags. 130 Also in 2025, the New York City Bar Association recommended that all exchange-listed issuers be permitted to register offerings in any amount on Form S-3. 131 More recently, a participant at the Commission’s annual Small Business Forum recommended that the Commission consider 128 31st Annual Government-Business Forum on Small Business Capital Formation, Final Report (Nov. 15, 2012), at 26, 28, available at https://www.sec.gov/info/smallbus/gbfor31.pdf. 129 Legislative Proposals to Enhance Capital Formation and Reduce Regulatory Burdens, Part II: Hearing Before the Subcomm. on Capital Markets and Government Sponsored Enterprises, 114th Cong. (2015) (Statement of David Weild) (“We would also support the expansion of Form S-3 and other shelf registration approaches to improve access to capital for smaller public companies that are current with their SEC filings.”), available at https://financialservices.house.gov/uploadedfiles/hhrg-114-ba16-wstate-dweild-20150513.pdf. 130 See Transcript of Small Cap Policy Roundtable: Reassessing the Framework for Small Public Companies at 2627, 34-35 (June 18, 2025), available at https://www.sec.gov/files/small-cap-policy-roundtable-transcript.pdf. 131 See letter from New York City Bar Ass’n to The Hon. Paul S. Atkins dated May 27, 2025 (“We recommend that the Commission eliminate or increase the one-third public float limit in General Instruction I.B.6 of Form S-3 or exempt issuers after some period of time (e.g., one year after the company becomes eligible to file on Form S-3).”), available at https://www.nycbar.org/reports/letter-to-sec-chairman-atkins-with-recommendationsfor-rulemaking-and-guidance/. 43 shortening the One-Year Seasoning requirement, eliminating or reducing the $75 million public float requirement in General Instruction I.B.1, and eliminating or reducing the 12-month ineligibility that results from a late Form 8-K filing. 132 Various others commentators have recommended modernizing the registration process or shelf eligibility without specifying the manner for doing so. 133 There also have been legislative attempts to expand access to Form S-3 by allowing all exchange-listed issuers to register any offering on the form, regardless of public float, and to allow non-exchange-listed issuers to register on Form S-3 primary offerings of up to one-third of their public float. 134 Opponents of these proposals, however, cautioned that such changes could “allow companies to avoid SEC staff review and risk increased fraud and market manipulation, particularly for non-exchange traded companies.” 135 132 See Transcript of the 45th Annual Small Business Forum at 161-62 (Mar. 9, 2026), available at https://www.sec.gov/files/transcript-45th-sb-forum.pdf. 133 See, e.g., 44th Annual Small Business Forum, Final Report (Apr. 10, 2025) (recommending that the Commission “[s]treamline the SEC registration process for smaller businesses”); Transcript of the 44th Annual Small Business Forum (Apr. 10, 2025), comments of Dave Lynn (encouraging the Commission to review smaller company access to shelf registration), available at https://www.sec.gov/files/2025-SBF-508Transcript.pdf; 37th Annual Government-Business Forum on Small Business Capital Formation, Final Report (Dec. 12, 2018) (forum participants recommending “[i]ncreasing the companies that can take advantage of Form S-3—whether listed on a national exchange or not”), available at https://www.sec.gov/info/smallbus/gbfor37.pdf; Legislative Proposals to Enhance Capital Formation for Small and Emerging Growth Companies, 113th Cong. (2014) (Statement of Brian Hahn) (recommending “[e]xpanded eligibility for Form S-3 to encompass a greater pool of small companies”), available at https://financialservices.house.gov/uploadedfiles/hhrg-113-ba16-wstate-bhahn-20140409.pdf. 134 Accelerating Access to Capital Act of 2017, H.R. 4529, 115th Cong. (2017); Accelerating Access to Capital Act of 2016, H.R. 2357, 114th Cong. (2015); Small Business Freedom to Grow Act of 2014, H.R. 4568, 113th Cong. (2014). 135 H.R. Rep. No. 115-576, at 9 (2017) (noting that “[c]urrent restrictions for companies using Form S-3, which are based on size and whether they are traded on an exchange, ensure that they have timely information available to the public, ample liquidity, and strong corporate governance standards,” and expressing the view that the proposed legislation “would dangerously expand the type of companies that are eligible to use . . . Form S-3 to register their securities before selling them to the public”), available at https://www.govinfo.gov/content/pkg/CRPT-115hrpt576/pdf/CRPT-115hrpt576.pdf; see also Legislative Proposals to Enhance Capital Formation for Small and Emerging Growth Companies, 113th Cong. (2014) 44 2. Proposed Amendments We are proposing to amend Form S-3’s registrant requirements and to eliminate the form’s transaction requirements 136 to simplify and expand eligibility, thereby allowing significantly more issuers to avail themselves of the form’s flexibility to access the public securities markets on demand. 137 With respect to the registrant requirements, the proposed amendments would eliminate the “One-Year Seasoning,” “Certain Failures to Make Payments and Defaults,” “Electronic Filings,” and “Interactive Data Files” eligibility requirements described above. 138 The proposed amendments would retain the “Current in Exchange Act Reporting” and “Timely in Exchange Act Reporting” requirements and would add two new registrant requirements prohibiting a subset of “ineligible issuers,” as that term is defined in Rule 405, and certain other types of issuers (as discussed in section II.A.2.a.v below) from using Form S-3. With respect to the transaction requirements, the proposed amendments would eliminate those requirements, including the requirement in General Instruction I.B.1 that the issuer have a (Statement of Professor John C. Coffee, Jr.) (expressing concern about allowing smaller issuers, including those in the over-the-counter market and Pink Sheets, to use Form S-3 for unlimited capital raising activities, but also questioning whether the market would accept such offerings or whether reputable underwriters would feel comfortable underwriting such offerings), available at https://financialservices.house.gov/uploadedfiles/hhrg113-ba16-wstate-jcoffee-20140409.pdf. 136 Certain transaction-based requirements would continue to apply to subsidiaries that rely on a parent’s Form S-3 eligibility to conduct offerings on Form S-3. See section II.A.2.c below for a discussion regarding Form S-3 eligibility for subsidiaries. 137 We also recognize that our proposed expansion of Form S-3 eligibility would provide more issuers that register debt securities subject to the Trust Indenture Act of 1939 (“Trust Indenture Act”) [15 U.S.C. 77aaa et seq.] (“subject debt securities”) with greater flexibility to comply with the Trust Indenture Act’s trustee qualification requirements. The Trust Indenture Act requires an issuer that registers subject debt securities on Form S-1 to file in the initial filing or a pre-effective amendment a trust indenture to be qualified and related trustee statement of eligibility and qualification. Section 305(b)(2) of the Trust Indenture Act [15 U.S.C. 77eee(b)(2)], however, permits the issuer to designate the trustee on a delayed basis for a shelf offering and, as a result, the issuer may file the trustee statement of eligibility and qualification after the related registration statement, such as a Form S-3, goes effective. 138 See supra notes 52-60 and accompanying text. 45 public float of $75 million or more to offer an unlimited amount of securities for cash on Form S-3. As such, any issuer that meets the proposed registrant requirements would be eligible to use Form S-3 for any primary or secondary offering of the issuer’s securities. 139 Each of the proposed amendments is discussed, in turn, below. 140 a. Form S-3 Registrant Requirements i. Exchange Act Reporting (One-Year Seasoning, Current, and Timely Requirements) We propose to eliminate the One-Year Seasoning requirement (which currently is in General Instruction I.A.3(a)) that requires an issuer to have been an Exchange Act reporting company for at least 12 calendar months prior to filing a Form S-3 because, as discussed in section I.B above, we believe an investor’s ability to obtain issuer-specific information in Exchange Act reports does not depend on the length of an issuer’s reporting history. Rather, the ability to obtain such information depends on whether an issuer is current and timely with 139 As is currently the case, Form S-3 would not be available for exchange offers or business combination transactions under the proposed amendments. 140 We are proposing various amendments to simplify and modernize Form S-3. First, we are proposing to amend Item 9 and eliminate Item 12(a)(3) of Form S-3. Item 9 requires an issuer to “[f]urnish the information required by Item 202 of Regulation S-K (§229.202 of this chapter), unless capital stock is to be registered and securities of the same class are registered pursuant to Section 12 of the Exchange Act,” in which case an issuer must (in accordance with Item 12(a)(3)) incorporate by reference “the description of such class of securities which is contained in a registration statement filed under the Exchange Act, including any amendment or reports filed for the purpose of updating such description.” We are proposing to eliminate Item 12(a)(3) and amend Item 9 to specify that 17 CFR 229.202 (“Item 202 of Regulation S-K”) disclosure should be provided in response to that item regardless of whether capital stock that is registered under section 12 of the Exchange Act is to be registered on the form. We note that issuers could elect to incorporate by reference the information required by Item 9 pursuant to Item 12(d). Item 12(d) currently permits an issuer to satisfy the disclosure requirements of Items 3 through 11 to be incorporated by reference from documents filed pursuant to Section 13(a), 14, or 15(d) of the Exchange Act. Second, we propose to amend Item 12(d) to also permit incorporation by reference from any Securities Act or Exchange Act filing in order to give issuers greater flexibility to incorporate by reference on Form S-3. Third, we also are proposing revisions to simplify Item 11(b) of Form S-3 by removing references to specific filings that are required to be incorporated by reference for the purpose of including certain financial statements required by that item. We do not believe it is necessary to specify the forms that need to be incorporated by reference. Instead, we believe issuers should have the flexibility to incorporate the requisite financial statements from any filing that is made with the Commission. 46 respect to its reporting obligations. Under the proposed amendments, an issuer would immediately become eligible to use Form S-3 upon having a class of securities registered pursuant to section 12(b) or 12(g), or becoming subject to section 15(d), of the Exchange Act. 141 Although we are proposing to eliminate the One-Year Seasoning requirement, we are proposing to retain the Current and Timely in Exchange Act Reporting requirements. 142 Specifically, proposed General Instruction I.A.1.a would set forth the requirement that an issuer be subject to the Exchange Act’s reporting requirements, and proposed General Instructions I.A.1.b and c, respectively, would set forth the Current and Timely in Exchange Act Reporting requirements. Accordingly, under the proposed amendments, Form S-3 eligibility would be contingent on (among other things) an issuer being subject to the Exchange Act’s reporting requirements and having timely filed all reports and other materials required to be filed under sections 13(a), 14(a), 14(c), and 15(d) of the Exchange Act, other than specified reports on Form 8-K, during the preceding 12 calendar months and any portion of a month immediately preceding the filing of a Form S-3, or, if an issuer had been subject to such requirements for less than 12 calendar months, during the time the issuer had been required to file such reports and materials. 143 141 Thus, under the proposed amendments, an issuer could become an Exchange Act reporting company—for example, by registering a class of equity securities on Form 10 under section 12(g) of the Exchange Act—and then immediately conduct its first registered offering on Form S-3. 142 At least one observer has previously recommended that the Commission eliminate the timeliness requirement altogether. See 2006 Report of the Advisory Committee on Smaller Public Companies, supra note 126. 143 The proposed amendments would codify the staff’s longstanding interpretation that for purposes of determining whether a registrant has timely filed all reports required to be filed during the past twelve calendar months only reports under section 13(a) or 15(d) of the Exchange Act and materials under sections 14(a) and 14(c) of the Exchange Act, other than specified reports on Form 8-K, would be considered. As is the case currently, the timeliness requirement would not apply to reports that are required solely pursuant to Item 1.01, 1.02, 1.04, 1.05, 2.03, 2.04, 2.05, 2.06, 4.02(a), or 5.02(e) of Form 8-K. We note that the Commission recently issued a proposal that would allow registrants to elect to report on a semiannual basis on a new Form 10-S in lieu of 47 We continue to believe issuers must be current and timely with respect to their Exchange Act reports at the time of filing a registration statement on Form S-3 because short-form and shelf registration are premised on the availability of information about an issuer. 144 If an issuer is not current in its Exchange Act reporting obligations, then the issuer-specific information that may be needed to make an investment decision would not be available. Moreover, where Exchange Act reports that are required to be incorporated by reference into a Form S-3 have not been filed, the issuer likely would not be in compliance with section 10 of the Securities Act. 145 Further, we believe that conditioning Form S-3 eligibility on the timely filing of Exchange Act reports establishes a compelling incentive for issuers to timely file their Exchange Act reports, thereby helping ensure continuous availability of issuer-specific information even after the shelf registration statement has become effective and in the period during which an issuer conducts its offerings and at other times. reporting quarterly on Form 10-Q. See Semiannual Reporting, Release No. 33-11414 (May 5, 2026) [91 FR 24968 (May 7, 2026)] (“Semiannual Reporting Proposal”). If that proposal is adopted, an issuer that elects to file semiannually would be required to comply with the timeliness requirement with respect to its Form 10-S filings rather than with respect to Form 10-Q filings. The staff position discussed in this footnote and any other staff guidance, statements, or positions referenced in this release, represent the views of Commission staff and are not a rule, regulation, or statement of the Commission. The Commission has neither approved nor disapproved the views reflected in these staff positions or the content of these staff statements and, like all staff positions or statements, they have no legal force or effect, do not alter or amend applicable law, and create no new or additional obligations for any person. 144 See 1981 Reproposal at 41913 (stating that “Form S-3 eligibility criteria are based on the Commission’s belief that information about companies using the form already is known or is so readily available that it need not be repeated in a prospectus”). 145 See 15 U.S.C. 77j. We recognize that not all Exchange Act reports required to be filed during the 12 calendar months preceding the filing of a Form S-3 are incorporated by reference into the Form S-3 and therefore are not part of the prospectus. Item 12 of Form S-3 requires incorporation by reference of reports filed since the end of the latest fiscal year for which a Form 10-K was required to be filed, which could be less than a 12-calendar month period. For example, assume a calendar-year-end issuer files its Form 10-K for fiscal year end 2025 on Mar. 3, 2026. If the issuer files a Form S-3 on Aug. 27, 2026, it would be required to incorporate by reference all reports required to have been filed since Dec. 31, 2025, which would be less than a 12-calendar month period. Nonetheless, we believe the 12-calendar month lookback period is appropriate because it helps ensure that all information required to be incorporated by reference into the Form S-3 is timely filed and therefore available to investors. 48 Consistent with the Commission staff’s current practice of not objecting to use of Form S-3 when an untimely filing has been made under certain limited circumstances, we also propose to amend the form’s instructions to provide that an issuer would remain Form S-3 eligible notwithstanding an untimely filing having been made during the relevant lookback period so long as: (a) the filing was made within seven calendar days of the original due date (where 17 CFR 240.12b-25 (“Rule 12b-25”) applies, the seven calendar days would be calculated from the filing’s original due date and not from the end of the time period prescribed under Rule 12b25 146) and (b) the issuer made only one untimely filing during the relevant lookback period. 147 We want to encourage issuers to make their Exchange Act filings on a timely basis. At the same time, however, we believe loss of Form S-3 eligibility can be a disproportionately harsh consequence for a single untimely filing during a 12-month period. Accordingly, we propose to permit issuers to remain Form S-3 eligible when the conditions described herein are satisfied. We believe a seven-day period provides a reasonable amount of time to file the missed report or other material while helping ensure investors receive necessary information within a reasonable timeframe. 146 That is, if an issuer attempts to rely on Rule 12b-25 but is unable to comply with the requirements of that rule, the seven calendar days would be calculated from the filing’s original due date and not from the end of the period prescribed under Rule 12b-25. If, on the other hand, an issuer complies with Rule 12b-25 with respect to a report, such report is deemed to be filed on the prescribed due date and, therefore, the issuer would not need to rely on the seven-calendar-day grace period described in this section. 147 If the seventh calendar day falls on a Saturday, Sunday, or holiday, the report or other material would need to have been filed no later than the first business day immediately following the Saturday, Sunday, or holiday. Under General Instruction G.(3) of Form 10-K, a reporting issuer subject to the proxy rules may omit Part III information from the Form 10-K if that information is included in the issuer’s proxy statement filed with the Commission within 120 calendar days after the fiscal year end. This instruction treats the omitted Part III information as timely filed on the Form 10-K due date. If the issuer fails to file this information with its proxy statement or fails to amend its Form 10-K within 120 calendar days, the Form 10-K is considered untimely. The proposed seven-day period would apply only to the original Form 10-K due date and not to the additional 120day period provided by General Instruction G.(3). 49 The One-Year Seasoning requirement may make registered offerings less attractive or feasible for new Exchange Act reporting companies. Currently, such issuers must file a new Securities Act registration statement on Form S-1 for any registered offerings conducted during their first year of being an Exchange Act reporting company despite having already filed a Securiti [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Asec%3A7fa49cf7b6526683. Public record. Not legal advice.