From the Freshfields SEC Desk: The Great Scale Back: SEC Proposes Sweeping Reforms to Public Offering Rules and Public Company Filer Status
On May 19, 2026, the Securities and Exchange Commission proposed two significant rulemakings that, taken together, represent what the SEC leadership describe as dramatic reforms to encourage companies to go public and stay public.
One proposal, the Registered Offering Reform, would dramatically expand access to shelf registration, the ability to make public communications during a public offering, and other capital-raising flexibilities long reserved for larger and more seasoned public companies, to nearly every reporting company that is current in its filings—including to companies almost immediately after their initial public offering. This would benefit companies considering going public as they would be able to conduct offerings on a shelf registration statement shortly after an IPO. This would increase their ability to take advantage of market windows and raise capital quickly without needing to build into their timetables a risk of potential SEC review of offering-specific post-IPO registration statements. Many companies that are already public would also receive these same benefits.
The second proposal, the Filer Status Reform, would fundamentally restructure the framework governing how public companies are categorized for reporting and disclosure purposes. This would result in dramatically lower disclosure requirements and no required Sarbanes Oxley Act (SOX) Section 404(b) auditor attestation for all but the largest and most seasoned issuers. The changes would include requiring only two years of financial statements, scaled-back executive compensation disclosure, and no requirements for say-on-pay and similar advisory votes. These accommodations would last at least for a company’s first five years post-IPO (and perhaps indefinitely should a company’s public float never exceed the SEC’s proposed threshold).
Both proposals are now open for a 60-day public comment period following publication in the Federal Register.
SEC Chairman Paul S. Atkins, framing these proposals as foundational to his "Make IPOs Great Again" agenda, stated: “These proposals build upon the legislative and regulatory concepts that have proven successful in the past and aim to extend that success to more companies — particularly small and mid-sized companies — and incentivize them to go and stay public.”
The two proposed rulemakings are distinct but operate according to a similar logic of simplifying regulatory categories and levelling regulatory requirements for both smaller and larger public companies.
The Registered Offering Reform would operate by levelling up the regulatory benefits to companies that are smaller or who went public recently, granting them some of the same flexibilities that larger, more seasoned issuers enjoy when conducting registered offerings. It would accomplish this by granting those smaller and more recently public companies access to most of the considerable benefits of Form S-3 eligibility and well-known seasoned issuer (WKSI) status. Form S-3 eligibility confers the ability to conduct offerings on shelf registration statements, as well as streamlined disclosure requirements compared to the Form S-1 registration statement available to all public companies. The proposal would also liberalize the benefits of WKSI status by both creating two new categories of issuers: Eligible Listed Issuers (ELI) and Seasoned Eligible Listed Issuers (SELIs), and expanding the ability of companies that are currently not WKSIs to qualify for one of these categories. ELIs would be able to enjoy the wider range of safe harbors for communications during a public offering (so-called “gun-jumping” safe harbors) available to WKSIs, as well as other accommodations. SELIs would enjoy those benefits and, like WKSIs under the current regulatory framework, would also be able to take advantage of automatically effective shelf registration without prior SEC review.
If the Registration Offering Reform “levels up” regulatory benefits to smaller and newly public companies, the Filer Status Reform would “level down” disclosure, auditor attestation and other requirements for many larger public companies. This second proposed rule would expand the disclosure accommodations currently afforded to smaller and newer public companies to a wider range of larger and more seasoned registrants. This proposed rule would accomplish this by overhauling and simplifying the existing patchwork of Exchange Act filer categories — large accelerated filers (LAFs), accelerated filers (AFs), non-accelerated filers (NAFs), smaller reporting companies (SRCs) and emerging growth companies (EGCs) — by collapsing them into a simplified binary structure of LAFs and NAFs, while creating a new subcategory for the smallest companies. The default NAF category would include a larger number of registrants who would enjoy more regulatory accommodations. This move is analogous to a tax reform where, rather than changing multiple tax rules, the reform would simplify the regime into two tax brackets and move most issuers into the lower bracket. The net result: disclosures and other requirements would be dramatically scaled back for a significant number of issuers.
Together with the SEC’s recent proposal to allow public companies to report semiannually rather than quarterly, these proposed changes would decrease the costs and administrative burden of going and staying public while increasing flexibility for SEC-registered capital-raising transactions for many companies. The proposals, particularly the Registered Offering Reform, may also signal a dialing back of SEC staff review of registered offerings given the wider availability of shelf registration. Should the proposals be implemented, some SEC staff resources might be redirected from reviewing registration statements towards reviewing public company periodic disclosures, which would, in turn, be scaled back by the Filer Status Reform.
Most of the benefits contained in the two reform proposals would not, however, be available to Foreign Private Issuers (FPIs), as the SEC stated it is still considering the regulatory regime for those issuers in the wake of last summer’s FPI Concept Release.
1. The Current Regulatory Landscape
In his statement on the two rule proposals, Chairman Atkins observed, "The current public company regulatory framework is in dire need of a comprehensive overhaul. Over the past twenty-five years, layers upon layers of legislative changes and SEC rules have created many different categories of public companies with complex, overlapping requirements and benefits."
On the offering side, access to shelf registration via Form S-3 is currently conditioned on at least 12 months of timely Exchange Act reporting history and a public float of at least $75 million for unlimited primary offerings. The most favorable category of capital-raising eligibility — WKSI status — requires a public float of at least $700 million or at least $1 billion in registered non-convertible securities issued for cash over the prior three years. These thresholds, which have not been updated in over 20 years, currently exclude newly public and smaller companies from the considerable capital raising flexibility afforded by shelf registration and automatically effective shelf registration. SEC review of shelf registration statements, which are typically very short and omit significant offering-specific disclosure, has been for structural and practical reasons less interventionist than the agency’s review of traditional post-IPO registered offerings. Automatically effective shelf registration statements or take-down offerings off of effective shelf registration statements are not subject to prior SEC review. Simply put, when the SEC has to take a registration statement effective – and particularly when that registration statement includes more extensive disclosure – the agency’s leverage is greater, and its review of disclosure can typically be more searching.
In terms of current filer status, public companies today are slotted into one or more of five overlapping filer categories, each carrying a distinct combination of filing deadlines, disclosure obligations, and exemptions from certain requirements.1 LAFs — companies with a public float of at least $700 million that have been reporting for at least 12 consecutive months and are not eligible for SRC status — face the most demanding disclosure obligations while AFs, NAFs, SRCs, and EGCs each carry different combinations of scaled disclosure accommodations. Appendix A describes the principal elements of the definitions that current and proposed rules use or would use to categorize filers.
2. The Proposed Registered Offering Reform: Mechanics and Impacts
Expansion of Form S-3 Eligibility:
The central structural change in the Registered Offering Reform is the near-complete dismantling of the eligibility prerequisites for Form S-3, which, in turn, is a gateway for shelf registration and other offering accommodations. The proposed Registered Offering Reform rule would replace the current conditions with a simplified set of requirements focused on disqualifications and reporting compliance rather than an issuer’s seasoning or size. The net effect would be to supersize the number of companies eligible to use Form S-3. Eligible companies could then take advantage of the streamlined disclosures in S-3 registration statements and, moreover, the ability to conduct offerings using shelf registration.
The proposed amendments would, among other changes, eliminate the one-year seasoning requirement and all transaction-based requirements for S-3 eligibility.2 By removing the current rule requiring 12 consecutive months of timely Exchange Act reporting history before filing a Form S-3, a company would thus become eligible to use Form S-3 almost immediately upon completing an IPO or otherwise becoming an Exchange Act reporting company.
The only S-3 barrier under the proposal would be “ineligibility” conditions, which would themselves be streamlined from current rules. While the proposal would still require issuers to be current and timely in their periodic reports, it would add grace period mechanisms, including continued Form S-3 eligibility for issuers making a required filing within seven calendar days of the original due date, provided that an issuer made only one such untimely filing in the preceding 12 calendar months. The proposal would also eliminate Form S-3 eligibility requirements tied to XBRL compliance and whether registrants have made required dividend payments and have avoided certain contractual defaults.
Categories of ineligible issuers would include: blank check companies; shell companies (with an exception for former SPACs that are no longer shell companies at the time of filing); penny stock issuers; issuers convicted of certain felonies or misdemeanors within the prior three years; issuers subject to antifraud decrees or orders within the prior three years; and issuers whose registration statements are the subject of pending proceedings or refusal/stop orders under Section 8 of the Securities Act.
FPIs and asset-backed issuers would not be eligible to use amended Form S-3; however, these companies that satisfy existing eligibility criteria for use of existing shelf registration forms (Form F-3 and Form SF-3, respectively) would be permitted to continue using those forms, including with respect to automatic effectiveness for FPIs that qualify as WKSIs under current rules.
This proposed rule would dramatically expand S-3 eligibility: the SEC estimates that, if adopted, it would lead to an increase of over 60% in the number of issuers eligible to use Form S-3.
Extension of WKSI-Level Benefits:
Beyond eligibility for basic Form S-3, the Registered Offering Reform would extend to a substantially larger group of issuers the automatic shelf registration and gun-jumping safe harbors benefits that come with WKSI status.
WKSI status — which permits the most favorable capital-raising tools, including automatic shelf registration, free writing prospectus flexibility, pay-as-you-go filing fees, and pre-filing gun-jumping safe harbors (Rules 163 and 163A) — currently requires a public float of at least $700 million or at least $1 billion in registered non-convertible securities issued over the prior three years, in addition to meeting Form S-3 requirements.
The proposal would remove the $700 million public float and $1 billion registered debt thresholds as conditions for WKSI-level benefits. To do so, it would eliminate the WKSI category for domestic issuers and replace it with three new tiered categories, two with WKSI-like benefits
- The base tier covers all Form S-3 eligible issuers, which would gain a subset of current WKSI benefits, including the ability to use free writing prospectuses under Rule 433 and broker-dealer research report safe harbors under Rule 139.
- Eligible Listed Issuers: This second tier covers any exchange-listed issuer that meets the proposed Form S-3 registrant requirements, with no minimum public float or seasoning period. Additional benefits for ELIs include:
- greater flexibility for pre-filing and post-filing communications, including expanding Rule 163 and 163A pre-filing communications safe harbors and Rule 433 free-writing prospectus eligibility to all Form S-3 eligible issuers, including ELIs,3
- the ability to register additional classes of securities through automatically effective post-effective amendments under Rule 413,
- the ability to omit the identities of selling securityholders on resale registration statements,
- omission of certain information from a base prospectus if it is part of a shelf registration statement under Rule 430B(a), and
- a pay-as-you-go basis for registration statement filing fees.
- Seasoned Eligible Listed Issuers (SELIs): this third tier covers any ELI that has additionally been subject to Exchange Act reporting for at least 12 calendar months and adds the benefit of automatic shelf registration.
The estimated result is an increase of over 200% in the number of registrants eligible for ELI or SELI status compared to the number of registrants eligible for WKSI status.
Other Proposed Changes:
The Registered Offering Reform proposal would also include a grab bag of other changes to registered offerings, including the following:
- Preemption of State Securities Laws: The proposal would extend federal preemption of state securities law registration and qualification requirements — currently applicable primarily to registered offerings of exchange-listed securities or securities that are equal in seniority or senior to such exchange-listed securities — to all registered offerings, including those of unlisted securities. The proposal would accomplish this by defining "qualified purchaser" under Section 18(b)(3) of the Securities Act to encompass all purchasers in registered offerings. This change would eliminate the cost and complexity of complying with individual states' "Blue Sky" registration and qualification regimes for registered offerings of unlisted securities.
- Modernization of Form S-1: The proposal would also expand the ability to incorporate information by reference into Form S-1, the standard long-form registration statement used primarily for IPOs and by companies not yet eligible to use Form S-3. Currently, backward incorporation by reference requires the issuer to have filed an annual report for its most recently completed fiscal year, and forward incorporation (i.e., incorporating future SEC filings) is available only to SRCs. The proposed amendments would allow both backward and forward incorporation for all eligible issuers, regardless of filing status. The SEC estimates an increase of up to 106% in the number of issuers eligible to forward incorporate on Form S-1.
- The timeline for audited financial statements in registration statements: Under the proposal, audited financial statements for registration statements would now move to the same timeline as Form 10-Ks, with an NAF having 90 days after the end of its fiscal year until audited financial statements for that fiscal year would be required in its registration statement. With these proposals, registrants filing a registration statements after February 14, when financial statements from the previous fiscal year would go stale under the current regime, can now use those financial statements if the Form 10-K has not been filed yet.
- Deemed Delay of Registration Statements: Under the proposed amendments, issuers would not need to include delaying amendments with their filings. The default rule would be that effectiveness would be delayed, unless an issuer opts out. These changes to Rule 473 aim to prevent inadvertent premature effectiveness due to companies’ failure to include proper delaying language in their filings.
3. Filer Status Reform
The Filer Status Reform would significantly reduce disclosure obligations for a substantial number of public companies by reclassifying a large portion of public companies as “Non-Accelerated Filers.” NAF status would result in significant disclosure and other regulatory accommodations for a wider range of public companies.
The Reclassification: More Public Companies Qualify as NAFs
Under the proposed framework, every domestic public company would be classified as either an LAF or an NAF, while FPIs would continue to be governed by the existing filer status rules. Some NAFs would fall under a newly created supplementary SNF (small non-accelerated filer) subcategory for the smallest companies. Fewer companies would fall under the LAF category, with its more extensive disclosure requirements.
Large Accelerated Filers. The LAF public float threshold would be raised from $700 million to $2 billion. This would be calculated using the average closing price over the last 10 trading days of the second fiscal quarter, multiplied by the number of shares of common equity held by non-affiliates as of the last day of that quarter.
Two additional constraints apply that would make it slightly more difficult to fall into (or out of) LAF status. First, the proposal imposes a two-year public float testing window: a company may only transition into (or out of) LAF status after its public float has remained above (or below) the $2 billion threshold for two consecutive fiscal years. This mitigates the risk that temporary surges or dips in the market price of a company’s common equity would trigger a change in filer status. Second, the proposal includes a 60-month seasoning requirement: a company may not become a LAF until it has been subject to Exchange Act reporting requirements for at least 60 consecutive calendar months — effectively five full years. This seasoning period would begin to run at an issuer’s IPO.
The SEC estimates that the combined effects of these definitional changes would significantly reduce the number of companies that are LAFs and the heightened disclosure requirements that come with that status. Under those estimates, 19.2% of registrants would be LAFs under the proposed framework, compared to 35.4% today.
Non-Accelerated Filers. NAF would become a residual category — the proposed rule would define this as any issuer that is not a LAF. Every registrant would begin as a NAF at IPO and remain in that status for a minimum of five years due to the 60-month seasoning requirement. According to SEC estimates, approximately 80.8% of registrants would fall into this tier, representing around 6.5% of total public market float.
Small Non-Accelerated Filers. A new SNF subcategory would apply to NAFs with total assets of $35 million or less, assessed over the two most recent second fiscal quarters. According to SEC estimates, approximately 17.9% of all registrants would qualify for this new status.4
The Benefits to Public Companies that Qualify for NAF Status: Fewer Disclosure Requirements, No Required Auditor Attestation and Other Accommodations
Companies that have NAF status would enjoy significant benefits. The substantive heart of the Filer Status Reform is the extension to all NAFs of accommodations currently available only to SRCs and EGCs. This would in effect supersize the accommodations first granted to EGCs by the “IPO on-ramp” contained within the JOBS Act of 2012, which were expanded by Congress in 2015.
Under the Filer Status Reform proposal, more companies could enjoy those accommodations and for a longer period (i.e., at least five years after IPO and potentially indefinitely, if a company never trips LAF status).
Under the proposed rules, NAFs would enjoy the following accommodations:
- Financial statements. Under the proposed rule, NAFs could:
- file two years of audited financial statements rather than three (which also impacts MD&A, as described below);
- follow the simplified financial statement presentation allowed by Article 8 of Regulation S-X;
- use condensed interim financial statement formats (per Article 8); and
- apply a 20% (rather than 10%) threshold for separate financial statements of equity investees (Regulation S-X Rule 3-09).
- Auditor attestation. Currently required of both LAFs and AFs, the auditor attestation on internal control over financial reporting (ICFR) required by SOX Section 404(b) would be eliminated for all NAFs. According to SEC estimates, this single change would exempt approximately 60% of all companies currently subject to the requirement and would alone result in material savings given the estimated median audit fee impacts in the range of $100,000 to $219,000 per year. The management of NAFs will still have to establish and maintain ICFR, state its responsibility for this maintenance and provide an assessment of the effectiveness of their ICFR. A NAF would not need to provide this management’s assessment until it has filed (or been required to file) an annual report for the prior fiscal year with the SEC.
- Deferred accounting standards. NAFs could defer compliance with new or revised financial accounting standards for up to five years from initial registration, an accommodation currently available only to EGCs.
- Non-financial disclosures. NAFs could:
- provide a less detailed business description5;
- provide two years of Management Discussion & Analysis (MD&A) rather than three (tracking the requirement to present only two years of audited financial statements); and
- omit several other areas of disclosure, including risk factor disclosure from periodic reports, quantitative and qualitative market risk disclosures, a stock performance graph, supplementary financial information and resource extraction payment disclosures
- Executive compensation and governance. NAFs could:
- omit significant executive compensation disclosure, including Compensation Discussion & Analysis (CD&A), pay versus performance disclosure, pay ratio disclosure, compensation committee reports and compensation committee interlocks disclosure;
- elect not to hold say-on-pay, say-on-pay-frequency or say-on-golden-parachute advisory votes; and
- disclose related person transactions at a standardized $120,000 threshold, replacing the more complex threshold currently applicable to SRCs.
Practical Implications For Issuers and Capital Markets
- Encouraging IPOs: By lowering the disclosure and other regulatory burdens of being a public company while increasing access to shelf registration, the proposals may encourage more companies to pursue an IPO.
- IPO Practices: The SEC has also asked whether these proposed changes may affect market practices around IPOs more broadly — for example, potentially reducing the need for overallotment options given the accelerated availability of follow-on offerings under shelf registration statements, and potentially increasing the attractiveness of direct listings as an alternative path to becoming a public company (since expanded Form S-3 eligibility would significantly expand capital-raising flexibility shortly after a listing). Companies and their advisors should evaluate how these changes might affect IPO timing, structure and post-IPO capital planning.
- Gearing Up Early for Shelf Registration: Given that shelf registration would be available much earlier in a public company’s life cycle, companies going public and their advisors should consider establishing the processes to quickly conduct shelf offerings, such as filing a universal shelf registration statement shortly after an IPO and keeping diligence materials updated post-IPO.
Impacts on the Audit: The removal of SOX 404(b) auditor attestation requirements for many companies may reduce audit costs. It remains to be seen whether auditors may alter their procedures (and fees) to gain comfort over the integrity of financial reporting in other ways. This may be particularly true in areas where internal control weaknesses have already been identified through the attestation process and have yet to be remediated. This could result in increased audit hours and fees for companies that transition to NAF status, potentially offsetting some of the cost savings the reform is intended to deliver. Companies anticipating a change in filer status should engage their auditors early to understand how their audit approach and fee structure may be affected.
For the 1,596 registrants that the SEC estimates would become newly exempt from SOX 404(b), the decision whether to retain or discontinue auditor attestation of ICFR deserves careful analysis beyond the cost-savings calculus. Investor expectations, debt covenant requirements, institutional shareholder policies, and potential signals to the market regarding internal controls quality are all relevant considerations.
Enforcement Implications: Heightened Risk in a Judgment‑Driven Disclosure Regime. As the proposals reduce disclosure and other regulatory requirements, the SEC Division of Enforcement is likely to focus more on the quality of disclosure, the rigor of materiality determinations and the reasonableness of company judgments. In practice, this may lead to increased scrutiny of filer status determinations, the scope of scaled disclosures, and offering-related communications—areas that depend on fact-specific assessments and are often evaluated in hindsight. This shift places greater responsibility on management and gatekeepers, as decisions that were previously dictated by detailed requirements now turn on business judgment and the effectiveness of disclosure controls.
Although disclosure obligations are reduced, antifraud liability remains unchanged, reinforcing the importance of a reasonable basis for key decisions and contemporaneous documentation. Given the applicable statute of limitations for SEC enforcement actions, these judgments may also be subject to later reevaluation under a more exacting or traditional disclosure framework. At the same time, state attorneys general and shareholders also may challenge omissions of information that investors have come to expect and rely upon, particularly where reduced disclosure creates a gap between regulatory minimums and market expectations.
Reassess filer status immediately upon adoption. If the rules are adopted as proposed, legal and compliance teams should analyze their filer status under the new framework.
Voluntary disclosure and market expectations. While the proposed rule would eliminate or scale back a number of disclosure obligations, companies should not assume that elimination of a requirement always translates into a practical ability to omit all of this information. Institutional investors, research analysts, and proxy advisory firms have developed expectations around disclosure that often exceed the regulatory minimum, and companies that fall below those expectations — even where they are technically compliant — may face pressure from shareholders, negative analyst commentary or adverse voting recommendations. Companies should therefore carefully assess investor, analyst or proxy advisor expectations before electing to omit newly optional disclosures and should document the reasoning behind those decisions as part of their disclosure controls and procedures.
Foreign private issuers. The proposed rules take a deliberately cautious approach to FPIs: they would prohibit FPIs from using Form S-3 or Form S-1 and would limit existing WKSI status to FPIs only — meaning the new ELI and SELI framework, with its expanded registration and communication benefits, would not be available to FPIs at this time. FPIs would continue to use Form F-3 and, if eligible, retain WKSI status with its associated benefits.
The SEC has indicated that this exclusion stems from its desire to further contemplate the issues raised in its June 2025 Concept Release on FPIs. FPIs and their advisors should monitor developments related to the Concept Release and regulation of FPIs process closely. Changes to FPI eligibility criteria could have significant consequences for registration, reporting, and communication practices. Any such changes would also intersect with the five-year statute of limitations on SEC enforcement actions, meaning that decisions made under the current FPI framework could be reviewed under a revised one.
What to Do: Legal Practitioners and Compliance Professionals
- Consider the WKSI-benefit expansion in offering logistics. Companies that would newly qualify for enhanced communication benefits — including free writing prospectus flexibility and pre-filing communications — should work with counsel to update their offering protocols and disclosure procedures. The expanded pre-filing communication window, in particular, has implications for investor outreach strategies in advance of registered offerings.
Review state law preemption impact. For issuers that conduct registered offerings of unlisted securities — or practitioners who advise clients that do so — the proposed preemption of state Blue Sky requirements would significantly simplify offering logistics and reduce the need for multistate compliance analysis. Practitioners should monitor the final rule text for the precise scope of the definition of "qualified purchaser" and any conditions attached to preemption.
Engage in the comment process. Both proposals carry a 60-day comment period. Given the breadth of the proposed changes — and the SEC’s explicit request for comment on a range of technical questions — legal practitioners and compliance professionals with substantive views on the design of the new framework have a meaningful opportunity to shape the final rules. Areas likely to warrant close attention include the mechanics of the two-year stability test, the scope of the ineligible issuer restrictions under the revised Form S-3, and the appropriate treatment of co-filing registrants that may remain implicitly subject to LAF requirements.
Your Freshfields capital markets contacts would be delighted to discuss your feedback on the proposed rules and the possibility of authoring comment letters.
Looking beyond the two pending proposals, Chairman Atkins has signaled that these proposed rulemakings are "just the beginning" of a more comprehensive effort to reshape the public company regulatory framework. He has indicated that future proposals to reform Regulation S-K disclosure requirements will build on the foundation established by today's proposals "with materiality as its north star." Legal practitioners and compliance professionals should therefore treat these proposals not as isolated rule changes but as the opening phase of what may be a generational reconfiguration of the obligations and opportunities attendant to US public company status.
This post was written with the assistance of associates Dan Fox, Grace Brockmeyer, William Gu, and Kelli Nguyen.
Please contact the authors or any of your Freshfields Capital Markets contacts with questions about these SEC rule proposals or should you want to either submit a comment letter or provide input for a Freshfields letter.
This insight is part of the From the Freshfields SEC Desk series, where our former SEC regulators share perspectives on SEC developments.
Appendix A
Summary of Current Filer Status Categories – Principal Terms
| Current Category | Requirements |
|---|---|
| Large Accelerated Filer |
|
| Accelerated Filer |
|
| Non-Accelerated Filer |
|
| Smaller Reporting Company |
|
| Emerging Growth Company |
|
Summary of Proposed Filer Status Categories – Principal Terms
| Proposed Category6 | Requirements |
|---|---|
| Large Accelerated Filer |
|
| Non-Accelerated Filer |
|
|
|
The below chart summarizes the key exceptions registrants would be entitled to under the SEC’s proposals if they are reclassified from LAFs to NAFs.
| Category | Exception |
|---|---|
| Non-Financial Disclosures | Less detailed business description |
| Two years of MD&A instead of three | |
| May omit: risk factor disclosure from periodic reports, quantitative and qualitative market risk disclosures, a stock performance graph, supplementary financial information and resource extraction payment disclosures | |
| Financial Statements and Disclosures | Apply the more permissive Article 8 of Regulation S-X (previously reserved for SRCs), which requires fewer years of audited financial statements |
| File two years of audited financial statements instead of three | |
| Use condensed interim financial statement formats | |
| Apply a 20% threshold (instead of 10%) for separate financial statements of equity investees (Reg. S-X Rule 3-09) | |
| Executive Compensation & Governance | Exempt from: CD&A, pay versus performance disclosure, pay ratio disclosure, compensation committee reports and compensation committee interlocks disclosure |
| Elect not to hold say-on-pay / say-on-pay-frequency / say-on-golden-parachute advisory votes | |
| Related-party transaction disclosure threshold standardized at $120,000 for all filers (replacing the more complex current SRC threshold) | |
| ICFR Auditor Attestation | SOX 404(b) auditor attestation on internal controls eliminated for all NAFs |
| Would exempt approximately 60% of companies currently subject to the requirement | |
| Deferred Accounting Standards | NAFs could defer compliance with new or revised financial accounting standards for up to five years from initial registration (currently available only to EGCs) |
***
1. For example, SRCs, EGCs and non-accelerated filers are currently exempt from SOX Section 404(b), which requires an independent auditor to attest to management's assessment of the effectiveness of the company's internal control over financial reporting, a process that can be costly and time-consuming.
SRCs and EGCs also
- benefit from shorter historical periods for disclosure of related-party transactions and disclosure lookback periods and scaled executive compensation disclosure obligations;
- may limit their Summary Compensation Table to fewer named executive officers and fewer years of data; and
- are not required to make Compensation Discussion and Analysis or CEO pay ratio disclosures
EGCs are exempt from the say-on-pay, say-on-pay-frequency, and golden parachute advisory vote requirements that apply to larger companies. EGCs may additionally provide only two years of audited financial statements in an IPO registration statement and may defer compliance with new or revised accounting standards until the dates those standards apply to private companies. Under the SEC’s proposed reforms, many of these accommodations would be extended to a significantly broader universe of public companies.
2. These current requirements include restrictions on the types of offerings an issuer may conduct, including the $75 million public float threshold for unlimited primary offerings, the alternative thresholds available to issuers below that float level, and the one-third of public float cap on limited primary offerings by smaller exchange-listed issuers.
3. The proposals extend Rule 139 safe harbors for broker-dealer research reports to all Form S-3 eligible issuers, including ELIs.
4. Under the proposal, SNFs enjoy extended deadlines for periodic filings, exemptions from internal controls over financial reporting (ICFR) auditor attestations, less granular financial statement requirements, and shorter historical periods that audited financial statements, management discussion and analysis, and executive compensation disclosure must cover.
5. For example, NAFs would have the same disclosure requirements as SRCs currently do, with fewer details for business description updates, shorter disclosure periods, and customer information.
6. Registrants would be required to assess their filer status under the new categories as of the end of the fiscal year prior to when the new SEC proposals become final rules.
