SEC Proposes Major Overhaul of Capital Markets Access and Public Company Reporting
The SEC has proposed sweeping reforms to expand access to public capital markets and significantly reduce reporting and compliance burdens for public companies.
On May 19, 2026, the Securities and Exchange Commission (“SEC”) proposed significant rule changes that, if adopted, would fundamentally expand access to the public capital markets for a broader range of issuers while significantly reducing the compliance burden for the vast majority of public companies. The proposals address a longstanding concern; the cost and complexity of going and staying public has grown considerably over the decades, causing many companies to seek capital through private markets instead. The SEC is now proposing to extend many benefits previously reserved for only the largest and most established companies to a much broader range of issuers.
Registered Offering Reform
Expanded Shelf Registration Access (Form S-3 Amendments):
The proposed amendments would significantly broaden access to Form S-3, the short-form registration statement that allows eligible issuers to register securities offerings more quickly and cost-effectively than through a full Form S-1 filing. Key changes include:
Amendment to Form S-3 Registrant Requirements
Exchange Act Reporting (One-Year Seasoning, Current, and Timely Requirements):
The proposed amendments would eliminate the current requirement that an issuer must have been an Exchange Act reporting company for at least 12 calendar months before filing a 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 under section 12(b) or 12(g), or becoming subject to section 15(d), of the Exchange Act — meaning issuers in their first year as public companies could access Form S-3 as soon as they are current and timely in their Exchange Act reporting obligations, which requirement is retained.
Certain Failures to Make Payments and Defaults:
The proposed amendments would remove the current requirement that conditions Form S-3 eligibility on an issuer's satisfaction of certain factors related to payment defaults and failures, meaning that an issuer's history of financial difficulties or defaults would no longer disqualify it from using Form S-3.
Electronic Filings and Interactive Data Files:
The proposed amendments would remove two existing Form S-3 eligibility conditions: (i) General Instruction I.A.7(a), which requires an issuer to have filed all required electronic filings with the Commission; and (ii) General Instruction I.A.7(b), which requires an issuer to have submitted all required Interactive Data Files electronically to the Commission during the preceding 12 calendar months.
Prohibition on Use of Form S-3 by Certain Ineligible Issuers:
Although the proposed amendments would broaden Form S-3 eligibility, certain categories of issuers that pose a greater risk of non-compliance with Federal securities laws would be prohibited from using the form and would instead be required to use Form S-1. Specifically, the following categories of issuers would be prohibited from using Form S-3:
Newly Added: “BSP issuers,” defined as issuers that are, or within the past three years were, a blank check company, a shell company other than a business combination related 2 shell company, or an issuer in an offering of penny stock, with an exception for former Special Purpose Acquisition Companies (“SPACs”) that have successfully completed a de-SPAC transaction and are no longer shell companies at the time of filing;
Existing Restrictions (Carried Over from Rule 405): The remaining prohibited categories are not new and are carried over from the existing “ineligible issuer” definition under Rule 405. Issuers falling into any of the following categories would continue to be barred from using Form S-3: (1) convicted of a felony or misdemeanor; (2) subject to an antifraud-related court or administrative order; (3) subject to a Section 8 refusal or stop order; or (4) facing a pending Section 8A proceeding, in each case within the past three years.
Prohibition on Use of Form S-3 by Certain Other Issuers:
In addition to the ineligible issuer prohibitions above, four additional categories of issuers would be prohibited from using Form S-3 at any time: (i) foreign governments and Foreign Private Issuers (“FPIs”); (ii) asset-backed issuers, who are directed to use Form SF-3; (iii) investment companies; and (iv) Business Development Companies (“BDCs”), with both investment companies and BDCs required to use other forms specifically adopted by the Commission for their respective issuer types.
Successor Registrants:
The proposed amendments would eliminate the current rule that allows a successor registrant to rely on its predecessor's Exchange Act reporting history for Form S-3 eligibility. Going forward, a successor registrant would be treated as a new Exchange Act reporting company and must rely solely on its own reporting history.
Amendment to Form S-3 Transaction Requirements
$75 Million Public Float:
The proposed amendments would eliminate the $75 million minimum public float requirement currently in General Instruction I.B.1 of Form S-3. Under the proposed amendments, any issuer that satisfies the Form S-3 registrant requirements would be eligible to use Form S-3 for any primary or secondary offering of its securities, regardless of the size of its public float.
Elimination of Baby Shelf Rule and Other Transaction Requirements:
The proposed amendments would eliminate all transaction requirements under Form S-3's General Instructions I.B.2 through I.B.6. Most notably, this includes the elimination of the “baby shelf” rule under General Instruction I.B.6, which currently caps smaller issuers' primary offerings at one-third of their public float in any rolling 12-month period. Conforming changes would also be made to other parts of Form S-3 and related rules and forms.
Form S-3 Eligibility of Majority-Owned Subsidiaries:
The proposed amendments would allow majority-owned subsidiaries that are not Exchange Act reporting companies to register Guarantee-Related Offerings on their parent's Form S-3, provided the parent is eligible to use Form S-3 and both are co-registrants on the same registration statement.
At-the-Market (“ATM”) Offerings:
The proposed amendments would expand the pool of issuers eligible to conduct ATM offerings as a result of the broader Form S-3 eligibility expansion. To protect investors, ATM offerings would be limited to securities listed or traded on a qualified “trading market,” defined as a national securities exchange or a Commission-designated market that meets certain minimum standards, such as minimum bid price, public float, and trading volume requirements.
Amendments to Well-Known Seasoned Issuers (“WKSIs”) Eligibility and Enhanced Registration and Communication Benefits:
The proposed amendments would replace the existing WKSI framework with a new three-tier structure that extends enhanced registration and communication benefits to a significantly broader range of issuers. Under the current framework, only issuers with a public float of at least $700 million or at least $1 billion in non-convertible securities issued in primary registered offerings over the prior three years qualify as WKSIs. The proposed amendments would remove these thresholds entirely and replace them with an exchange-listing-based tier structure as follows:
New Issuer Tier Framework:
Tier 1 — Form S-3 Eligible Issuer:
Any domestic issuer that is current and timely in its Exchange Act reporting obligations and is not an “ineligible issuer” under Rule 405. No public float threshold or exchange listing is required.
Tier 2 — Eligible Listed Issuer (“ELI”):
A Tier 1 issuer that additionally has at least one class of common equity securities listed on a national securities exchange. No public float threshold is required.
Tier 3 — Seasoned Eligible Listed Issuer (“SELI”):
A Tier 2 issuer that has additionally been subject to Exchange Act reporting requirements for at least 12 calendar months, representing the highest tier with the most comprehensive benefits.
The table below summarizes the specific benefits available to issuers at each tier:
| Enhanced Registration and Communication | Current Rule | Proposed Rule |
|---|---|---|
| Rule 139 – research report exemption |
|
All Form S-3 eligible issuers |
| Rule 163 – pre-filing offers | WKSIs | ELIs |
| Rule 163A – pre-filing offers for Form S-8 offerings | WKSIs | ELIs |
| Rule 164 – post-filing Free Writing Prospectuses ("FWPs") for Form S-8 offerings | WKSIs | ELIs |
| Rule 413 – ability to register additional classes of securities, or securities of a majority-owned subsidiary | WKSIs | ELIs |
| Rule 430B(a) – ability to omit: (i) information as to whether the offering is a primary offering or an offering on behalf of persons other than the issuer, or a combination thereof, (ii) the plan of distribution for the securities, (iii) a description of the securities registered other than an identification of the name or class of such securities, and (iv) the identification of other issuers | WKSIs | ELIs |
| Rule 430B(b) – for resale registration statements, may omit the identities of selling security holders and amounts of securities to be registered on their behalf |
|
All Form S-3 eligible issuers |
| Rule 433 – prospectus not required to accompany or precede FWPs |
|
All Form S-3 eligible issuers |
| Rule 456(b)/457(r) – "pay-as-you-go" | WKSIs | ELIs |
| Rule 462 – automatic shelf registration | WKSIs | SELIs |
Availability of Enhanced Registration and Communication Benefits to Majority-Owned Subsidiaries:
The proposed amendments would permit majority-owned subsidiaries of ELIs and SELIs to access the Enhanced Registration and Communication Benefits, including automatic shelf registration. A subsidiary that does not independently qualify as an ELI or SELI may still access these benefits based on its parent's status, provided that the subsidiary and parent are co- registrants on the same registration statement and the subsidiary is either registering a Guarantee-Related Offering on Form S-3 or is independently eligible to use Form S-3 and is registering non-convertible securities other than common equity.
Elimination of WKSI Category of Issuer for Domestic Issuers:
The proposed amendments would retain the WKSI definition in Rule 405 but amend it to clarify that only FPIs could qualify as WKSIs, which would continue to qualify under the existing criteria.
Form S-1 Amendments — Incorporation by Reference
Form S-1 is the default registration statement available to any domestic issuer not eligible for another form and, unlike Form S-3, is subject to SEC staff review and does not permit shelf or delayed primary offerings. Currently, Form S-1 permits issuers to backward incorporate previously filed Exchange Act reports by reference only if the issuer has filed a Form 10-K for its most recently completed fiscal year, and permits forward incorporation, automatic updating of the registration statement via future Exchange Act filings, only for Smaller Reporting Companies (“SRCs”). The proposed amendments would make the following key changes:
Elimination of the Form 10-K Requirement for Backward Incorporation:
The proposed amendments would eliminate the requirement that an issuer must have filed a Form 10-K for its most recently completed fiscal year before being eligible to incorporate previously filed Exchange Act reports by reference. This change would particularly benefit issuers in their first year of Exchange Act reporting who have not yet filed an annual report.
Extension of Forward Incorporation by Reference:
The proposed amendments would expand forward incorporation by reference, which allows automatic updating of the registration statement via future Exchange Act filings, to all eligible Form S-1 issuers, not just SRCs. The SEC describes the current limitation as “anomalous,” as it forces larger issuers to file costly post-effective amendments and prospectus supplement updates.
Other Changes:
The proposed amendments would also (i) prohibit BSP issuers from using incorporation by reference; (ii) amend disclosure requirements for material changes, annual financial statements, and periodic report incorporation to align with the elimination of the Form 10-K filing condition; and (iii) no longer allow FPIs to use Form S-1.
Form S-1 Amendment — FPIs, Investment Companies, and BDCs:
The proposed amendments would amend Form S-1 to explicitly prohibit three categories of issuers from using the form: (i) FPIs, who may instead file on Form F-1; (ii) investment companies; and (iii) BDCs, with both investment companies and BDCs required to use other forms specifically adopted by the Commission for their respective issuer types.
Preemption of State Securities Law Registration and Qualification
The proposed amendments would add a new definition of “qualified purchaser” to Rule 146 under Section 18(b)(3) of the Securities Act, which would preempt state securities law registration and qualification requirements for all registered offerings. Under this definition, any person to whom securities are offered or sold pursuant to a registered offering would be deemed a “qualified purchaser,” making such securities “covered securities” and therefore exempt from state-level registration and qualification requirements. Notably, states would retain their authority to investigate and bring enforcement actions for fraud, as well as to require notice filings for fee purposes.
Other Rule Amendments
Delaying Amendments:
The proposed amendments would revise Rule 473 so that registration statements would automatically be deemed delayed unless the issuer includes a legend on the facing page stating that effectiveness will follow section 8(a) of the Securities Act, eliminating the current requirement to file a separate delaying amendment. Issuers who want effectiveness on the twentieth day after filing must affirmatively include this legend on the registration statement's facing page.
Elimination of Certain Conditions Relating to Age of Financial Statements:
The proposed amendments would eliminate the income-related conditions in Rules 3-01(c)(2) and (3) and 8-08(b)(2) and (3) of Regulation S-X. As a result, SRCs and non-reporting companies would have 90 days after fiscal year end to provide audited annual financial statements regardless of timing of a registration or proxy statement, and non-SRC Exchange Act reporting companies that have filed all required reports would need to provide audited financial statements in a registration statement no later than their Form 10-K due date based on filer status.
Enhancement of Emerging Growth Company (“EGC”) Accommodations and Simplification of Filer Status for Reporting Companies
New Two-Tier Filer Status Framework
The SEC's second proposal would overhaul the existing public company reporting framework by replacing the current five-category filer system (large accelerated filers, accelerated filers, non-accelerated filers, SRCs, and emerging growth companies) with two straightforward categories: Large Accelerated Filer (“LAF”) and Non-Accelerated Filer (“NAF”). The accelerated filer and SRC categories would be eliminated entirely, with NAF becoming the default status for all Exchange Act reporting companies until they qualify as an LAF. The two categories are defined as follows:
LAF:
The proposed amendments would significantly tighten the LAF definition in three key respects: (i) raise the public float threshold from $700 million to $2 billion; (ii) require the threshold to be met for two consecutive fiscal years using a 10-trading-day average stock price, rather than a single day's closing price; and (iii) extend the seasoning requirement from 12 to 60 consecutive calendar months of Exchange Act reporting. LAFs would retain their current filing deadlines of 60 days after fiscal year end for Form 10-K and 40 days after quarter end for Form 10-Q.
NAF:
Any issuer that does not qualify as an LAF would be classified as a NAF, the default status for all Exchange Act reporting companies. Every registrant would begin as a NAF at IPO and remain so for at least five years, with filing deadlines of 90 days after fiscal year end for Form 10-K and 45 days after quarter end for Form 10-Q.
Extended Disclosure Accommodations for NAFs
Internal Control over Financial Reporting (“ICFR”) and the Auditor Attestation Requirement:
NAFs would be exempt from the ICFR auditor attestation requirement under Sarbanes-Oxley Section 404(b). NAFs would still be required to comply with Section 404(a) (management's own assessment of ICFR) and obtain a financial statement audit, but would not be required to obtain a separate auditor attestation. Management’s assessment and report on ICFR effectiveness would still be required of all NAFs.
Extension of SRC and EGC Accommodations to All NAFs:
All NAFs would receive the scaled disclosure accommodations currently available only to SRCs and EGCs, making separate reliance on Jumpstart Our Business Startups Act EGC provisions unnecessary for most companies. Key accommodations include:
SRC Accommodations Extended to All NAFs:
Two (not three) years of audited financials, Management’s Discussion and Analysis, and compensation tables; three (not five) named executive officers
Exemption from: risk factors, stock performance graph (except for NAFs that are investment companies), supplementary financial information, pay ratio disclosure, pay versus performance disclosure, market risk disclosures, Compensation Discussion and Analysis, certain compensation tables, related party policies, compensation committee reports, compensation committee interlocks and insider participation disclosure, and resource extraction disclosures
Scaled financials under Article 8 of Regulation S-X, provided that investment companies would not be permitted to rely on Article 8; BDCs and face-amount 7 certificate companies would receive equivalent relief under new Rule 3-19, including the ability to provide two rather than three years of statements of operations and cash flows
All registrants must disclose unresolved SEC staff comments on Forms 10-K/20-F received 180 or more days before fiscal year end
EGC Accommodations Extended to All NAFs:
Exemption from pay-versus-performance disclosure
Exemption from say-on-pay votes, frequency of say-on-pay votes, and golden parachute compensation disclosure in M&A transactions
Option to defer compliance with new or revised Financial Accounting Standards Board (“FASB”) accounting standards until the date that a private company is required to comply with such standards, for up to five years after initial registration with the SEC; this accommodation is currently available only to EGCs and would now be extended as a time-limited on-ramp benefit to all newly public companies; this election is irrevocable, meaning NAFs electing not to use this accommodation may not revisit the election in future filings
Confidentiality provisions under Securities Act Section 6(e)(2) for draft registration statements would remain available only to statutory EGCs.
Small Non-Accelerated Filer (“SNF”) — New Subcategory
The proposed amendments would create a new subcategory of NAFs — the SNF — defined as a NAF with total assets of $35 million or less as of the end of each of its two most recent second fiscal quarters. SNFs would receive extended filing deadlines of 120 days (instead of 90) after fiscal year end for Form 10-K and 50 days (instead of 45) after quarter end for Form 10-Q.
Transition Period
The SEC proposes new transition rules governing how existing registrants determine their filer status under the updated LAF/NAF/SNF framework. All registrants must complete this reassessment before the new rules take effect, with a deadline of the end of the fiscal year in which the rules become effective. Importantly, registrants must treat this as a clean-slate evaluation, as prior filer status is irrelevant and the new definitions apply in full. Registrants that miss the deadline will be automatically placed into their former status (LAF for prior LAFs, NAF for all others), with the additional consequence that any automatically designated NAF will be ineligible for SNF status regardless of its total assets. For those that complete the assessment on time, the benefits are immediate: newly qualified NAFs may apply scaled disclosure accommodations starting with their very next SEC filing, while SNFs may take advantage of extended filing deadlines beginning with their next Form 10-Q or 10-K.
Application to Other Filer Types
Asset-backed issuers and FPIs electing to use Form 20-F or Form 40-F would be excluded from the LAF/NAF/SNF framework and would continue under their existing reporting regimes.
Updated Small Entity Definitions
The proposed amendments would raise the total asset threshold for “small entity” status under the Regulatory Flexibility Act from $5 million to $35 million, harmonizing the definitions under the Securities Act and Exchange Act.
If you have any questions, please contact Anand Saha (asaha@cronelawgroup.com), Liang Shih (lshih@cronelawgroup.com), Daisy Dai (DDai@cronelawgroup.com), Hongye (Eve) Mao (hmao@cronelawgroup.com) or your usual Crone contact.
