On May 19, 2026, the U.S. Securities and Exchange Commission (the SEC or Commission) announced proposed rule and form amendments that would substantially revise the framework for registered securities offerings by U.S. public companies. The proposal is intended to facilitate capital formation by broadening access to short-form registration, expanding offering communications flexibility, and reducing certain procedural burdens associated with registered offerings, while maintaining robust investor protections.
This proposal was issued alongside another Commission rulemaking addressing filer status reform. In his statement accompanying the proposals, SEC Chairman Paul S. Atkins characterized both proposals as foundational to a broader agenda to encourage companies to go—and remain—public. Our client alert relating to that proposal is available here.
The proposal, if adopted substantially as proposed, would represent the most significant modernization of the registered offering framework in more than 20 years. The proposal would extend a number of accommodations that currently are available only to larger seasoned issuers to a significantly broader group of public companies, including many smaller reporting companies and newer registrants. The proposal would also make Form S-1 more workable for reporting companies that are not eligible to use Form S-3 and would preempt state registration and qualification requirements for registered offerings.
Form S-3 Eligibility and Flexibility
Today, Form S-3 eligibility generally requires companies to meet both registrant eligibility and transaction requirements. For primary offerings, companies must have a 12-month reporting history (seasoning requirement), be current and timely in that reporting, and for unlimited primary offerings, have at least $75 million of public float. Smaller companies that do not meet the public float threshold are limited in the amount they can raise using Form S-3 by the current “baby shelf” restrictions.
The proposal would make Form S-3 more broadly available for unlimited offerings by companies by removing the 12-month seasoning requirement and eliminating the transaction requirements, including the $75 million public float test. As a result, a company that is subject to the Securities Exchange Act of 1934 (Exchange Act) reporting and current and timely in its reports could become eligible to use Form S-3 without waiting a year and without regard to public float, subject to the existing concept of ineligible issuers. The proposal also would no longer render ineligible companies or their predecessors that were SPACs. Thus, a company that has gone public through an initial public offering, direct listing, Exchange Act registration, or de-SPAC would be able to use Form S-3 during the first year after its public debut. The proposal also introduces a seven-day grace period for up to one late filing during the relevant lookback period without affecting Form S-3 eligibility. In addition, the proposal would narrow the scope of antifraud-related actions that could result in ineligible issuer status for purposes of Form S-3 eligibility.
The Commission estimates that these amendments could increase by more than 60 percent the number of companies eligible to offer an unlimited amount of securities on Form S-3. The proposal would also include safeguards for investors by restricting access to Form S-3 for certain categories of issuers, including blank check companies, shell companies, penny stock issuers, foreign private issuers, asset-backed issuers, investment companies and business development companies.
Expansion of WKSI-Like Benefits
Under the current regime, many of the most useful offering accommodations are reserved for well-known seasoned issuers, or WKSIs, including broader communications flexibility, free writing prospectus use, pay-as-you-go filing fees and, for eligible companies, automatic shelf registration. These accommodations ease the capital-raising process for companies and have not introduced significant investor protection concerns since their adoption.
The proposal would expand the registration and communication benefits to more companies by tying many of these benefits to exchange listing and Form S-3 eligibility rather than the current WKSI criteria. Exchange-listed Form S-3-eligible companies would gain access to most of the accommodations now associated with WKSIs, and companies subject to Exchange Act reporting for at least one year would be eligible to use automatically effective shelf registration statements.
The SEC estimates that these changes could increase by more than 200 percent the number of companies eligible for these accommodations, reflecting a shift away from size-based access and toward reporting and exchange listing status.
Modernization of Form S-1
For companies that are not yet able to use Form S-3, the proposal would make Form S-1 easier to use by relaxing current restrictions on incorporation by reference. All eligible companies would be permitted to backward incorporate by reference even if they have not yet filed an annual report and to forward incorporate by reference (an accommodation currently reserved for those with smaller reporting company status).
If adopted, these changes would make registered follow-on offerings on Form S-1 more efficient for newer public companies and other reporting companies that are not eligible to use Form S-3.
Preemption of State Securities Law Registration
Under the current rules, securities listed or approved for listing on a national securities exchange are categorized as “covered securities” and are preempted from state blue sky registration and qualification requirements. Unlisted securities offered in registered offerings, such as those in non-traded business development companies (BDCs), are not covered securities and remain subject to blue sky laws on a state-by-state basis.
The proposal would define “qualified purchaser” for purposes of Section 18 of the Securities Act in a manner that would preempt state registration and qualification requirements for all registered offerings, including offerings of unlisted securities. If adopted, this change could reduce timing risk, cost, and execution complexity in offerings that do not currently benefit from full federal preemption.
Foreign Private Issuers
The proposal notes that the Commission is separately considering changes to the rules applicable to foreign private issuers and therefore the proposed changes would not apply to foreign private issuers (FPIs). The proposal would amend Form S-1 and Form S-3 to no longer allow FPIs to use the forms.
Conclusion
If adopted substantially as proposed, the proposal would expand access to short-form registration, reduce execution friction in registered offerings and extend capital markets flexibility to a broader range of reporting companies. Public companies should begin considering now how the proposed amendments could affect shelf registration planning, financing strategy, disclosure controls and offering communications practices. Comments on the proposal are due by July 27, 2026.
Wilson Sonsini would be pleased to discuss the proposal and its mechanics and help assess how the optional framework could intersect with a company’s existing reporting obligations and planning considerations, if adopted. For more information, please contact any member of the firm’s Capital Markets practice.
