SEC Proposes Transformative Rule Changes To The Registered Offering Process – Part 2

On May 19, 2026, the SEC proposed two separate rule changes that together represent the most significant modernization of the registered offering framework in more than twenty years.  Operating in coordination with a companion release which proposes to recalibrate public company filer status and expand emerging growth company accommodations, this reform package is designed to dismantle historical regulatory friction, facilitate capital formation, and simplify the compliance architecture for a vast majority of public issuers

In the first of these transformative potential rule changes, the SEC has proposed registered offering reforms that would: (i) increase access to shelf registrations on Form S-3; (ii) allow the use of offering communications that currently are limited to use by well-known seasoned issuers; (iii) expand the ability for broker-dealers to provide research report coverage; (iv) expand state law preemption to cover all registered offerings; and (v) expand the availability of incorporation by reference into Form S-1.

In two multi-part blog series, I will provide a deep dive into both of these rule proposals starting with the registered offering reform proposal.  In Part 1 of the series I provided background and a summary of the proposed rule changes – see HERE.  In this Part 2 I am delving into the proposed changes related to Form S-3.

INTRODUCTION

The ability to use Form S-3 confers significant benefits seeking to raise capital in the public markets.  Among those benefits is the ability to maintain a shelf registration statement and then issue securities under that registration statement, from time to time, without further SEC action (a shelf take-down).  These shelf take-down transactions can move extremely quickly – sometimes literally overnight – to take advantage of market up-ticks in price and volume.  An S-3 also allows for forward incorporation by reference such that it is updated through the filing of regular periodic SEC reports.

The current framework of Form S-3 is rooted in regulatory assumptions established in the early 1980s, which presumed that only large, seasoned public companies were subject to sufficient market following to justify short-form registration and disclosure integration. Today, the SEC acknowledges that the ubiquity of electronic communication, combined with thirty years of mandated filings on the EDGAR system, has rendered these rigid eligibility barriers obsolete. To align the registration framework with modern capital markets, the Commission proposes two fundamental changes to Form S-3 eligibility.

The proposed amendments eliminate the structural barriers to utilizing Form S-3 for primary shelf offerings. Under current regulations, an issuer must possess a minimum unaffiliated public float of $75 million and have a twelve-month reporting history under the Exchange Act to file a primary offering on Form S-3. The proposed framework completely eliminates both the public float requirement and the twelve-month seasoning period and in the process renders the current “baby shelf” rule and all other transaction related eligibility requirements obsolete.

EXPANDING FORM S-3 ELIGIBILITY

Form S-3 eligibility includes both general issuer requirements and transaction specific requirements.  Currently, companies must meet the following requirements to be eligible to use Form S-3:

• 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
• 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.
• 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.
• 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.
• 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.
• 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.
• EDGAR and XBRL – The Issuer must have filed all reports on the EDGAR system and submitted all XBRL data requirement to be submitted during the 12 calendar months and any portion of a month immediately preceding the filing of the registration statement on Form S-3.

For more details on S-3 eligibility, see my blog HERE,

In addition, once an issuer is eligible to use Form S-3 in general, it must meet certain requirements to use the Form for specific transactions.  In particular, general instructions 1.B.1 and 1.B.6 set forth the requirements for primary offerings.

To utilize General Instruction 1.B.1 for primary offerings, an issuer must have, among other things, a non-affiliated public float of $75 million or more. General Instruction 1.B.1 may also be used to register re-sale offerings. If the issuer has less than a $75 million public float it may rely on General Instruction 1.B.6 for limited primary offerings (the “baby shelf rule”).  Under the baby shelf rule, an issuer that is not a shell company and that has its securities listed on a national exchange, may register any primary offering with the limitation that the aggregate market value of securities sold by or on behalf of it during the 12 months immediately prior to, and including, the sale is no more than one-third of the issuer’s public float.  General Instruction 1.B.3 allows issuers with a public float of less than $75 million to use Form S-3 to register the resale of securities if the issuer trades on a national exchange.

Also, if the issuer does not have a $75 million non-affiliated public float, it may still utilize Form S-3 for primary offerings of non-convertible securities other than common equity, rights offerings, dividend or interest reinvestment plans and conversions of warrants or options.

The proposed amendments eliminate the general requirement that a company 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.  In addition, the proposed amendments eliminate the requirement that a company have a $75 million non-affiliated public float to use the Form for primary offerings under Instruction 1.B.1 and in the process render the baby shelf rules under Instruction 1.B.6 and all other transaction specific requirements obsolete.

Further, the proposed amendments eliminate the “Certain Failures to Make Payments and Defaults,” and the “EDGAR and XBRL” filing requirements.  The SEC believes each of these requirements are outdated.  For example, there is no way to file a report with the SEC other than on EDGAR in today’s world. Likewise, all companies are accustomed to using XBRL.

Under the proposed rules, Form S-3 eligibility will depend almost entirely on whether the issuer has filed all required Exchange Act reports and done so on time. As such, any issuer that has filed all reports on a timely basis would be able to use Form S-3 for any primary or secondary offering of its securities.  This change effectively makes timely filing compliance, the primary operational gatekeeper for shelf registration.

However, to maintain investor protections, the SEC will rely on the “ineligible issuer” concept to exclude bad actors and certain other companies from S-3 eligibility.  To accomplish this, the SEC will add a general instruction prohibiting the use of Form S-3 by certain “ineligible issuers.”  The SEC is also proposing to add other general prohibitions against using the form including by foreign governments, foreign private issuers and asset backed issuers.

The Timely Filing Requirement

As indicated, 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.  The excepted reports on Form 8-K include Item 1.01 (entry into a material definitive agreement), 1.02 (termination of a material definitive agreement), 1.04 (mine safety – reporting shutdowns and patterns of violations), 2.03 (creation of a direct financial obligation or an obligation under an off-balance sheet arrangement), 2.04 (triggering events that accelerate or increase a direct financial obligation or off-balance sheet obligation), 2.05 (costs associated with exit or disposal activities), 2.06 (material impairments), 4.02(a) (non-reliance on previously issued financial statements or related audit report where the company makes the non-reliance determination) or 5.02(e) (compensatory arrangements with certain officers).

This eligibility rule specifically refers to reports required to be “filed” under the Exchange Act.  Certain Items in a Form 8-K may be “furnished” and not “filed,” including disclosures pursuant to Items 2.02 (results of operations and financial conditions) and 7.01 (Regulation FD disclosure) and accordingly, the failure to timely file an 8-K under these Items will not affect Form S-3 eligibility.

As the requirement to timely file reports becomes the primary gatekeeper for Form S-3 usage, the SEC is also proposing to amend Form S-3 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 and 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 12b-25 if such filing is used, and (b) the issuer made only one untimely filing during the relevant lookback period.

Elimination of 12 Month Seasoning Requirement

The proposed amendment eliminates the rigid 12-month seasoning period. Instead, issuers will be required to be current and timely in their Exchange Act reporting during the preceding twelve calendar months, or for such shorter period that they were required to file reports.

Although an issuer would be eligible to use Form S-3 even before it had filed its first annual report on Form 10-K, under the proposed new rules, an issuer that had not been required to file a Form 10-K since becoming subject to section 13(a) or 15(d) of the Exchange Act would instead incorporate by reference a Securities Act or Exchange Act filing that contains “Form 10 information” with all financial statements required by Regulation S-X.  That filing may be the initial S-1 or Form 10 that resulted in the company becoming subject to the SEC reporting requirements.  As required now, the issuer would need to describe any and all material changes in the issuer’s affairs which have occurred since the end of the most recent fiscal year covered by the audited annual financial statements required to be included in the registration statement pursuant to Item 12(a)(1) that have not been described in a filing incorporated by reference into the registration statement.

This reform addresses a long-standing post-initial public offering hurdle. Historically, newly public companies were forced to wait an entire year before utilizing a shelf registration statement on Form S-3, frequently forcing them to rely on highly structured, dilutive private placements to satisfy interim capital needs. By removing the seasoning period, the SEC enables newly public operating companies to access public market liquidity on short-form registration almost immediately, reducing execution risk and transaction cost.

Addition of General Requirement Prohibiting Use By An “Ineligible Issuer”

Under proposed new General Instruction I.A.2 (which would be titled “Prohibition on Use of Form S-3 by Certain Ineligible Issuers”), an issuer would not be eligible to use Form S-3 if:

• The issuer is a “BSP issuer,” which the proposed amendments would define in Rule 405 as an issuer that is, or during the past three years the issuer or any of its predecessors was: (1) a blank check company as in Rule 419(a)(2); (2) a shell company, other than a business combination related shell company, each as defined in Rule 405, provided, however, that an issuer, other than a foreign private issuer, would not be deemed to be a shell company solely because during the past three years either the issuer or any of its predecessors was a “special purpose acquisition company (SPAC),” or (3) an issuer in an offering of a penny stock as defined in 17 CFR 240.3a51-1.
• Within the past three years, the issuer or any entity that at the time was a subsidiary of the issuer was convicted of any felony or misdemeanor described in paragraphs (i) through (iv) of section 15(b)(4)(B) of the Exchange Act;
• Within the past three years, the issuer or any entity that at the time was a subsidiary of the issuer was made the subject of any judicial or administrative decree or order arising out of a governmental action that: (1) prohibits certain conduct or activities regarding, including future violations of, the antifraud provisions of the Federal securities laws; (2) requires that the person cease and desist from violating the antifraud provisions of the Federal securities laws; or (3) determines that the person violated the antifraud provisions of the Federal securities laws; provided, however, that an issuer only would be ineligible to use Form S-3 under this provision if the prohibition, requirement, or determination is based on an untrue, false, or misleading statement of a material fact or an omission to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, in each case in violation of the applicable antifraud provision and arising from a registration statement filed under the Securities Act, the Investment Company Act, or section 12 of the Exchange Act, any offering materials provided to purchasers in connection with an offering exempt from the registration requirements of the Securities Act, or a filing required by section 13(a), 14(a), 14(c), or 15(d) of the Exchange Act or the Commission’s rules thereunder;
• The issuer has filed a registration statement that is the subject of any pending proceeding or examination under section 8 of the Securities Act or has been the subject of any refusal order or stop order under section 8 of the Securities Act within the past three years; or
• The issuer is the subject of any pending proceeding under section 8A of the Securities Act in connection with an offering.

Addition of General Requirement Prohibiting Use of Form S-3 by Certain Other Issuers

The proposed rules would add new General Instruction I.A.3, which would be titled “Prohibition on Use of Form S-3 by Certain Other Issuers” which prohibits use of the Form by: (i) foreign governments; (ii) foreign private issuers (FPIs) (FPI’s will continue to use Form F-3); (iii) asset backed issuers; (iv) investment companies; and (v) business development companies.

Elimination of the Public Float Threshold and Transaction Requirements

The proposed amendments eliminate the requirement that a company have a $75 million non-affiliated public float to use the Form for primary offerings under Instruction 1.B.1 and in the process render the baby shelf rules under Instruction 1.B.6 and all other transaction specific requirements obsolete.

Consequently, any issuer that satisfies the revised registrant requirements will be eligible to use Form S-3 for any primary or secondary offering, irrespective of its public float or the class of securities being offered. The SEC estimates that this change will result in a 60% increase in the number of public issuers eligible to offer an unlimited amount of securities on Form S-3, fundamentally democratizing access to shelf registrations, at-the-market programs, and registered direct offerings.

Exclusions For At-the-Market Offerings

Rule 415(a)(4) defines “at the market offering” as ”an offering of equity securities into an existing trading market for outstanding shares of the same class at other than a fixed price.”  Generally a company must be eligible to use Form S-3 (or F-3) to register a primary “at the market offering” (different rules apply to re-sale registration statements).  Over the years, the SEC has generally required that in order to utilize an at the market offering, a company must trade on a national exchange or the OTCQX or OTCQB level of OTC Markets (no pink sheets or OTCQID).

The proposed rules would amend Rule 415 to limit eligibility to conduct ATM offerings to securities listed or traded on a national exchange or market designated by the SEC.  The rule would include a non-exclusive list of attributes that would allow a market to be “designated by the SEC.”  Currently those markets would include the OTCQX and OTCQB levels of OTC Markets.

The Author

Laura Anthony, Esq.

Founding Partner

Anthony, Linder & Cacomanolis

A Corporate and Securities Law Firm

LAnthony@ALClaw.com

Securities attorney Laura Anthony and her experienced legal team provide ongoing corporate counsel to small and mid-size private companies, public companies as well as private companies going public on the Nasdaq, NYSE American or over-the-counter market, such as the OTCQB and OTCQX. For more than two decades Anthony, Linder & Cacomanolis, PLLC has served clients providing fast, personalized, cutting-edge legal service.  The firm’s reputation and relationships provide invaluable resources to clients including introductions to investment bankers, broker-dealers, institutional investors and other strategic alliances. The firm’s focus includes, but is not limited to, compliance with the Securities Act of 1933 offer sale and registration requirements, including private placement transactions under Regulation D and Regulation S and PIPE Transactions, securities token offerings and initial coin offerings, Regulation A/A+ offerings, as well as registration statements on Forms S-1, S-3, S-8 and merger registrations on Form S-4; compliance with the Securities Exchange Act of 1934, including registration on Form 10, reporting on Forms 10-Q, 10-K and 8-K, and 14C Information and 14A Proxy Statements; all forms of going public transactions; mergers and acquisitions including both reverse mergers and forward mergers; applications to and compliance with the corporate governance requirements of securities exchanges including Nasdaq and NYSE American; general corporate; and general contract and business transactions. Ms. Anthony and her firm represent both target and acquiring companies in merger and acquisition transactions, including the preparation of transaction documents such as merger agreements, share exchange agreements, stock purchase agreements, asset purchase agreements and reorganization agreements. The ALC legal team assists Pubcos in complying with the requirements of federal and state securities laws and SROs such as FINRA for 15c2-11 applications, corporate name changes, reverse and forward splits and changes of domicile. Ms. Anthony is also the author of SecuritiesLawBlog.com, the small-cap and middle market’s top source for industry news, and the producer and host of LawCast.com, Corporate Finance in Focus. In addition to many other major metropolitan areas, the firm currently represents clients in New York, Los Angeles, Miami, Boca Raton, West Palm Beach, Atlanta, Phoenix, Scottsdale, Charlotte, Cincinnati, Cleveland, Washington, D.C., Denver, Tampa, Detroit and Dallas.

Ms. Anthony is a member of various professional organizations including the Crowdfunding Professional Association (CfPA), Palm Beach County Bar Association, the Florida Bar Association, the American Bar Association and the ABA committees on Federal Securities Regulations and Private Equity and Venture Capital. She is a supporter of several community charities including the American Red Cross for Palm Beach and Martin Counties, Susan Komen Foundation, Opportunity, Inc., New Hope Charities, the Society of the Four Arts, the Norton Museum of Art, Palm Beach County Zoo Society, the Kravis Center for the Performing Arts and several others.

Ms. Anthony is an honors graduate from Florida State University College of Law and has been practicing law since 1993.

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