Making Public Offerings Great Again: Key Takeaways from the SEC’s Proposed Reforms

“Registered Offering Reform,” released by the Securities and Exchange Commission (the SEC) on May 19, 2026, represents one of the most consequential SEC rulemaking initiatives in decades. The proposed rule and form amendments aim to further the SEC’s goal of facilitating capital formation in the public securities markets while preserving investor protections. Changes would include, among others, significantly increased access to short-form registration on Form S-3, expanded communication and registration accommodations for public companies, and federal preemption of state regulation for all SEC-registered securities offerings.

The proposal was released as part of a pair of proposed rulemakings the SEC called “transformative reforms” aimed at incentivizing companies to go and stay public, the foundation of SEC Chairman Paul Atkins’ agenda to “Make IPOs Great Again.” For information about the SEC’s proposed amendments governing the public company reporting framework, see Covington’s client alert linked here.

Takeaways

• For all companies eligible to use Form S-3: Expanded communication and registration benefits will allow for more flexibility in executing capital-raising transactions. More companies would be able to file automatically effective shelf registration statements, utilize pay-as-you-go filing fees, and take advantage of communication safe harbors.
• For smaller companies: Form S-3 would not contain any transaction requirements. Consequently, companies with public floats under $75 million would not be limited in the amount of capital they could raise under a Form S-3. These companies and the investment banks that work with them may wish to consider the feasibility of putting capital-raising plans on hold until these proposed rules are in effect.
• For newly public companies and companies considering a public listing: Form S-3 would not contain a one-year seasoning requirement. As a result, subject to any contractual lock-up restrictions, a newly public company could file a shelf registration statement, including for a secondary transaction or an at-the-market offering program, immediately following an IPO.
• For companies currently ineligible to use Form S-3: The proposal would greatly reduce the scope of companies ineligible to use Form S-3 to BSPs (blank check companies, shell companies, and penny stock companies) and limited categories of companies who have been the subject of certain SEC investigations or enforcement actions or have committed certain criminal violations. For those companies, Form S-1 would permit backward and forward incorporation by reference, even by companies that have not yet filed their first annual report on Form 10-K or 20-F.
• For companies that became public through a de-SPAC transaction: Operating companies that became public as a result of a de-SPAC transaction will not be deemed BSPs solely by virtue of their former shell company status. Notably, the SEC’s proposal does not address whether the same treatment would be provided to operating companies that became public as a result of a reverse merger transaction.

Summary of Proposed Changes

Form S-3 Eligibility

Under the proposed rules, Form S-3 would be available to most companies without a one-year “seasoning” requirement. As a result, most public companies would become eligible to use Form S-3 immediately upon becoming a public company.[1] The proposed rules also would eliminate the “baby shelf” transaction requirements that currently place significant limitations on the amount of capital that a company with less than a $75 million public float can raise on Form S-3.

Registrant Requirements

To be eligible to use Form S-3 under the proposed rules, a public company need only:

• Either (i) have a class of securities registered pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934 (the Exchange Act) or (ii) be subject to Section 15(d) of the Exchange Act,
• Have timely filed all required reports under the Exchange Act, other than certain Form 8-K reports, during the 12 full calendar months and any portion of a month immediately preceding the filing of a Form S-3 (or, for companies that have been public for less than one year, such shorter time as the company has been required to file such reports), subject to an exception for a single qualifying untimely filing during this period,
• Not be a “BSP” (blank check, shell company, or penny stock) issuer;
• Not be a foreign government or an FPI, an asset-backed issuer, an investment company, or a business development company; and
• Not have committed certain criminal violations or have been the subject of certain SEC investigations or enforcement actions.

Notably, the proposed rules would eliminate the requirements that a company have a 12-month Exchange Act reporting history[2], have not failed to pay dividends or sinking fund installments on preferred stock or defaulted on indebtedness or leases, and have made all required electronic and Interactive Data File filings with the SEC.[3]

In addition, certain majority-owned subsidiaries of Exchange Act reporting companies that are not themselves Exchange Act reporting companies may continue to use a parent company’s Form S-3 to register “guarantee-related offerings” under proposed new General Instruction I.B.1, provided the parent company is eligible to use Form S-3 and the parent and subsidiary are co-registrants.

Elimination of Transaction Requirements

The proposed rules would eliminate all transaction requirements that currently appear in General Instruction I.B of Form S-3, such that any public company that meets the requirements outlined above would be eligible to use Form S-3.

Of particular note, there are currently limitations on the use of Form S-3 for a company with a public float under $75 million. The proposed rules would eliminate these “baby shelf” limitations, which can significantly complicate capital raising activity for smaller public companies. As a result, any company eligible to use Form S-3, regardless of the size of its public float, could offer and sell an unlimited amount of securities using Form S-3 (subject to market conditions and applicable limitations under stock exchange listing standards and state corporate law requirements). The SEC estimated that this change could result in an increase of over 60 percent in the number of companies eligible to offer an unlimited amount of securities on Form S-3.

At-the-Market Offering Programs

The SEC acknowledged that expanding Form S-3 eligibility would increase the universe of public companies eligible to sell equity securities in “at-the-market” offering programs. In order to ensure continued investor protection in this context, the proposed rules would amend Rule 415(a)(4) under the Securities Act of 1933 (the Securities Act) to limit at-the-market offerings to those of securities listed or traded only on national securities exchanges or markets designated by the SEC. The proposing release notes the SEC’s view that securities that qualify for the OTCQX Best Market tier or OTCQB Venture Market tier of the OTC Link ATS would continue to satisfy the definition of an existing “trading market” under Rule 415(a)(4) and therefore continue to be eligible for use in at-the-market offerings.

The SEC also confirmed that  at-the-market offerings can be used to facilitate resales of securities, and that the proposed rule and form amendments would apply equally to primary and secondary ATMs.

Notably, ATM programs using shelf registration statements would now be able to be set up in the first year of a public company’s life.

Replacing WKSI Status with ELI and SELI Status and Increased Availability of Enhanced Registration and Communication Benefits[4]

Under the proposed rules, current communication safe harbors and registration accommodations would be available to a significantly greater number of companies. Additionally, two new categories of issuers—eligible listed issuers (ELIs) and seasoned eligible listed issuers (SELIs)—would be created, largely phasing out the significance of the well-known seasoned issuer (WKSI) classification.[5]

ELIs and SELIs

An ELI would be defined as a company that meets the proposed Form S-3 registrant requirements and has a class of common equity securities listed on a national securities exchange (this status would apply to most public companies immediately following an NYSE or Nasdaq IPO). A SELI would be defined as an ELI that has been subject to the reporting requirements of the Exchange Act for 12 full calendar months and any portion of a month immediately preceding the relevant measurement date. This once-per-year measurement date would align with the current measurement date for WKSI status—as the latest of the filing of a Form S-3, the updating of a Form S-3 through an amendment pursuant to Section 10(a)(3) of the Securities Act, or, if the company has not filed or amended a registration statement for purposes of Section 10(a)(3) for a period of 16 months, the filing of the most recent Form 10-K or Form 20-F. A company would retain its status until the next determination date, even if it no longer satisfies relevant criteria during the course of the year.

A majority-owned subsidiary of an ELI or SELI would benefit from the proposed enhanced registration and communication benefits to the same extent as its parent entity.

As set forth below, the proposed rules would provide “WKSI-level” communication and capital-raising accommodations to a significantly larger universe of public companies, in many cases immediately following an IPO or other going public transaction.

Registration Benefits

The following table compares existing registration benefits with those that would be available to the new classes of companies under the proposed rules.

Communication Benefits

The following table compares existing communication benefits with those that would be available to the new classes of companies under the proposed rules.[6]

Form S-1 Incorporation by Reference

While we believe the expansion of access to Form S-3 to newly public companies will likely reduce use of Form S-1 registration statements, the proposed rules would also expand to a larger pool of companies the ability to incorporate by reference into a Form S-1 registration statement information from a company’s other filings with the SEC. Any public company other than a BSP would be able to incorporate by reference into a Form S-1 historically filed information (backward incorporation by reference) and future filed information (forward incorporation by reference). This would allow a newly public company to immediately have access to incorporation by reference into its Form S-1, potentially reducing duplicative disclosure and additional costs.

Federal Preemption of Blue Sky Registration and Requirements

The proposal would provide for federal preemption of state securities laws in all SEC-registered offerings. The SEC proposes to define a “qualified purchaser” under Section 18(b)(3) of the Securities Act to include all persons to whom securities are offered or sold pursuant to a registered offering, thereby rendering all such securities “covered securities” exempt from state securities law qualification and registration requirements.

Currently, unlisted securities, which often include warrants and other convertible securities, are subject to state securities registration and compliance requirements even if offered and sold in an offering registered under the Securities Act.

Age of Financial Statements

Currently, the rules regarding age of financial statements reflect a distinction between income- and loss-generating companies, and the proposed rules would remove such distinction. Under the proposed rules, a smaller reporting company (SRC) that is an Exchange Act reporting company and has filed all required reports or that is a non-reporting company would need to include audited annual financial statements within 90 days, rather than 45 days, after fiscal year-end; a non-SRC reporting company that has filed all reports due would need to include audited annual financial statements in a registration statement no later than its Form 10-K due date.

As mentioned above, in a separate proposing release, the SEC is proposing to eliminate SRCs as a category of filer. Consequently, if both sets of proposed rules are adopted as proposed, for all companies, audited annual financial statements would be required to be included in a registration statement no later than the company’s Form 10-K due date.

Next Steps

The proposed rules are subject to a 60-day notice-and-comment period. Newly public companies (or companies that will be newly public upon final rule adoption), SRCs and other smaller companies, and non-WKSIs are likely to be most positively impacted.

Companies that are supportive of the proposed changes or have additional viewpoints for the SEC to consider are highly encouraged to engage in the SEC’s comment process.