13 minute read | May.22.2026
On May 19, 2026, the U.S. Securities and Exchange Commission (the “SEC” or “Commission”) proposed amendments intended to facilitate capital formation in the public securities markets. The proposed amendments can be separated into several key categories, each of which is discussed in greater detail below.
The proposed amendments would remove the requirement that issuers be subject to the reporting requirements of the Exchange Act for at least 12 months before being eligible to use Form S-3 to register securities. In addition, the Commission proposes to eliminate all of the form’s transaction requirements, including the instruction that requires issuers to have at least $75 million in public float to register an unlimited amount of securities on Form S-3. 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.
Form S-3 would continue to require that issuers be current and timely in their Exchange Act reporting requirements. Consistent with the Commission staff’s current practice, an issuer would remain Form S-3 eligible notwithstanding a single untimely filing during the relevant lookback period, provided that the filing was made within seven calendar days of the original due date.
The Commission also proposes to eliminate the “Certain Failures to Make Payments and Defaults” requirement, as well as the Electronic Filings and Interactive Data Files requirements for Form S-3 eligibility, as the Commission believes these requirements are no longer necessary. Foreign private issuers (“FPIs”) would be prohibited from using Form S-3 in light of the pending FPI Concept Release, though they would continue to be able to utilize Form F-3.
The SEC estimates that the proposed changes could result in an increase of over 60% in the number of issuers eligible to offer an unlimited amount of securities on Form S-3.
One of the principal advantages of Form S-3 is the ability to conduct shelf offerings — offerings made on a delayed basis under Rule 415. An issuer that is Form S-3 eligible for primary offerings is permitted to register securities prior to planning any specific offering and, once the registration statement is effective, issue securities in one or more takedowns without waiting for further Staff action. This provides eligible issuers with greater control over the timing of their offerings, allowing them to take advantage of desirable market conditions and raise capital on more favorable terms. By contrast, Form S-1 registrants must prepare and file a registration statement at the time of an expected offering and await Staff action before offering or selling securities, making it more challenging — and in some instances, not feasible — for these issuers to take advantage of open market windows.
Expanding Form S-3 eligibility would also increase the population of issuers eligible to conduct primary at-the-market (“ATM”) offerings. To ensure this expansion is consistent with investor protection, the Commission proposes to amend Rule 415(a)(4) to limit eligibility to conduct ATM offerings to securities listed or traded only in specified markets. The proposed amendment would specify that the term “trading market” means that the securities are listed and traded on a national securities exchange or, if not listed on a national securities exchange, are traded in a market designated by the Commission. Securities that qualify for the OTCQX Best Market tier or OTCQB Venture Market tier of the OTC Link ATS would continue to qualify as offerings into an existing “trading market” for purposes of Rule 415(a)(4).
Another impact of this proposal would be the ability to register non-convertible debt without the “seasoned” reporter or transaction size requirements. Power companies, for example, raise and are expected to continue raising a significant amount of non-convertible debt to finance the construction and maintenance of generation facilities in the institutional private placement market and, more recently, the 144A/Regulation S market, which includes registration rights. Under those registration rights, an issuer is required to become a public reporting entity after completing A/B Exxon Capital exchange offers. This required reporting status following an exchange offer lasts only under the next Form 10-K, after which the registrant becomes a voluntary Section 15(d) reporter. These power companies are typically cooperatives and have no equity outstanding, and so, taken together, historically have not qualified under either the 12 calendar months of “required” reporting or public float transaction tests. The current non-convertible debt transaction size requirement is based on non-convertible debt offered for cash, not exchange, so that prong has historically failed, too.
If the S-3 eligibility proposal is implemented as proposed, these power companies could become eligible to file shelf registration statements and more easily access the capital markets for future financings.
Currently, certain registration and communication benefits are reserved for “well-known seasoned issuers” (“WKSIs”). In order to qualify as a WKSI, an issuer must have at least $700 million in public float or have issued at least $1 billion of debt securities in registered offerings over the preceding three years. The proposed amendments would eliminate the WKSI definition as it relates to all issuers other than FPIs and replace the three current categories of domestic issuers – unseasoned issuers, seasoned issues, and WKSIs – with three new tiers:
The Commission estimates that there could be an increase of over 200% in the number of issuers eligible for all of the enhanced registration and communication benefits. Specifically, under the proposed amendments, approximately 74% of Exchange Act reporting issuers in 2024 would be SELIs and, therefore, eligible to rely on all enhanced registration and communication benefits, compared to approximately 36% that were WKSIs in 2024.
The proposed amendments would modernize Form S-1 with respect to an issuer’s ability to incorporate information by reference. Currently, the ability to backward incorporate — that is, to incorporate by reference information into Form S-1 filed before the effective date of the registration statement — 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 — that is, to incorporate by reference information filed after the effective date of a Form S-1 — is currently limited to smaller reporting companies (“SRCs”).
Under the proposed amendments, issuers 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. The proposed amendments would also permit an issuer to use incorporation by reference during its first year as an Exchange Act reporting company, even when it had not yet been required to file a Form 10-K.
The proposed amendments would define “qualified purchaser” under Section 18(b)(3) of the Securities Act to preempt state securities law registration and qualification requirements with respect to any registered offering, including offerings of unlisted securities. Currently, such preemption applies only to registered offerings in which the securities being offered and sold are listed or approved for listing on a national securities exchange. The proposed amendments would therefore eliminate the costs associated with complying with numerous states’ registration and qualification requirements for registered offerings of unlisted securities, which the Commission believes would lower the cost of registered offerings and facilitate capital formation.
Under current rules, Rule 473 allows issuers to include a “delaying amendment” legend on the facing page of a registration statement to prevent the statement from becoming effective automatically on the twentieth day after filing. The proposed amendments would reverse this default by revising Rule 473 to provide that effectiveness of a registration statement would be deemed delayed automatically, unless the issuer affirmatively includes a legend stating that the registration statement is to become effective in accordance with Section 8(a) of the Securities Act. This change would eliminate the risk of inadvertent effectiveness that can occur when an issuer accidentally omits the delaying amendment, which under current rules can prematurely trigger Section 15(d) reporting obligations and risk commencement of stop order proceedings.
The proposed amendments would also eliminate certain income-related conditions in Regulation S-X that currently determine whether issuers are eligible for an extended grace period before a registration statement or proxy statement must include audited annual financial statements for the most recently completed fiscal year. Currently, registrants are not required to provide such audited financial statements when the effective date of the registration statement falls within the first 45 days after fiscal year end, and an extended grace period of up to an additional 14 to 44 days (depending on filer status) is available only if the issuer meets certain income-related conditions. By eliminating these income conditions, the Commission intends to reduce the costs of conducting registered offerings and certain proxy solicitations by expanding the population of issuers eligible for the extended grace periods, recognizing that loss-generating issuers — which may have a greater need for capital — should not face greater compliance burdens than higher-income registrants.
The proposing release addresses the potential interactions between the Registered Offering Reform proposals and the recently proposed Semiannual Reporting amendments, which would permit Exchange Act reporting companies to elect to file interim reports on a semiannual basis rather than quarterly. While less frequent disclosures could increase the likelihood that companies remain current and timely in their Exchange Act reporting (thereby maintaining Form S-3 eligibility), it could also increase information asymmetry to the extent that information is delayed or lost.
Specifically, an issuer eligible to use Form S-3 that elects semiannual reporting would be able to forward and backward incorporate by reference with less frequent reporting. This could lessen the informational value of incorporated materials, thereby increasing information asymmetry and investor search costs. Additionally, the differences in reporting frequency by companies could reduce comparability across issuers using Form S-3, requiring investors to undertake greater effort to evaluate trends and align disclosures.
The proposed amendments aim to encourage more registered offerings while maintaining appropriate investor protections. The amendments are intended to lower the cost of capital for many issuers in a number of ways, such as facilitating capital raising during more favorable market conditions, lowering illiquidity penalties, and mitigating pre-issue selling pressure.
The proposed changes to these eligibility requirements are also intended to reflect technological advancements and developments in the financial markets since the SEC adopted short-form registration, shelf registration, and the benefits accorded those issuers. The Commission notes that, because of the ease with which investors may now obtain disclosure documents and other information about an issuer through EDGAR and other sources, eligibility to use Form S-3 should not depend on the extent of an issuer’s market following, including analyst coverage. Instead, the Commission believes that Form S-3 eligibility should depend on whether investors can readily obtain issuer-specific information to make an informed investment decision.
U.S. public companies should consider the following in light of these proposed amendments:
The comment period will remain open for 60 days following publication of the proposing release in the Federal Register.