SEC Delivers Major Relief for Equity Compensation: Key Takeaways from New Guidance on Form S-8 and Rule 701

On October 15, 2026, the Division of Corporation Finance of the Securities and Exchange Commission (the SEC) issued a series of Corporation Finance Interpretations (CFIs) that significantly liberalize the registration requirements for equity awards under the Securities Act of 1933 (the Securities Act). The text of the CFIs can be found here.

The CFIs directly resolve several long-standing, recurring technical traps that have burdened public and private companies and their equity plan administrators:

• Pre-IPO Awards on Form S-8 (CFI 271.28): Newly-public issuers can register shares underlying pre-IPO awards on a standard Form S-8 (including restricted stock units (“RSUs”), restricted stock awards and stock options).
• Assumed M&A Awards for Target Former Service Providers (CFIs 126.14 and 271.29): Acquirers in M&A transactions can choose to either (i) rely on Form S-8 to register shares underlying assumed target awards held by former service providers of the acquired entity, or (ii) rely on the exemption under Rule 701 to avoid registering.
• Recycling Form S-8 Filing Fees on Forfeited Equity Awards (CFI 126.46): Public companies can apply previously paid SEC registration fees from forfeited equity awards toward future registrations of offers and sales when underlying shares return to the plan pool.
• Form S-8 Registration Timing for Full Value Awards (CFI 126.47): Public companies can register shares underlying full value awards (e.g., RSUs and restricted stock) on a standard Form S-8 at any time prior to the applicable vesting date, as long as the company was eligible to use Form S-8 for such awards on the grant date.
• Form S-8 Filing Fees for 401(k) Plan Investment in Employer Stock (CFI 126.19): Public companies registering shares underlying 401(k) plan employer stock funds on Form S-8 are only required to pay registration fees on employee elective deferrals and employer matching contributions to the extent invested in company stock, with no additional fee owed for indeterminate plan interests.     

Taken together, these interpretations represent a pragmatic, issuer-friendly shift from the SEC that eliminates unnecessary complications in corporate transactions and day-to-day equity plan administration. We provide a detailed summary of the relevant CFIs below.

Summary of the Relevant CFIs

1. Pre-IPO Awards on Form S-8 (CFI 271.28)

The Historical Problem: Private companies issuing equity awards to US-based service providers typically rely on the exemptions from registration provided by Rule 701 of the Securities Act, or Regulation D, promulgated under Section 4(a)(2) of the Securities Act. When an issuer undertook a public offering, questions routinely arose regarding the extent to which the shares underlying such awards could be registered on a standard Form S-8. This was largely an issue for restricted stock awards and restricted stock units or RSUs, since the SEC had previously issued guidance confirming that options could be registered at any time prior to exercise. As a result, many companies filed a longer and more complex resale Form S-8 containing a reoffer prospectus, to register these awards.

The New Relief: The SEC confirmed that once an issuer becomes public, it may register on a standard Form S-8 the shares to be issued upon the post-IPO vesting or exercise of outstanding pre-IPO equity awards originally granted under a valid exemption.

Practical Impact: Newly public companies can now register all outstanding employee equity awards on a single, standard Form S-8, placing all such awards on clean administrative footing. Participants holding pre-IPO awards (other than affiliates) can receive freely tradable, registered shares upon vesting or exercise without relying on Rule 144 holding periods, restricted stock legends or private exemption tracking, and without the issuer needing to produce a more burdensome resale Form S-8.

2. Assumed M&A Awards for Target Former Service Providers (CFIs 126.14 and 271.29)

The Historical Problem: In M&A transactions, outstanding equity awards held by current and former employees of the acquired or target company are often assumed by the buyer, or substituted with buyer equity awards. The General Instructions to Form S-8 restrict registration eligibility to employees, directors, and certain consultants of the issuer or its subsidiaries, permitting former employees to participate only if awards were granted to them while they were employed by the issuer. This limitation posed issues when a buyer assumed or substituted equity awards held by individuals who departed the target prior to closing of the transaction (e.g., retirees or terminated employees holding vested options).

• For public company buyers, this meant Form S-8 was unavailable for assumed awards of former service providers of the target company, often forcing buyers to rely on private exemptions, cash out those holders or register the shares via a different registration statement (e.g., Form S-3).
• For private company buyers, relying on Rule 701 presented a similar barrier, as the former service providers of the target company lacked a qualifying service relationship with the buyer (although, if the target company complied with Rule 701 with respect to the original awards at grant, other guidance generally permitted the Rule 701 exemption to continue to apply to assumed awards).

The New Relief:

• Public Company Buyers (CFI 126.14): Form S-8 may be used to register shares issuable upon the exercise or settlement of assumed equity awards held by former service providers of the target company.
• Private Company Buyers (CFI 271.29): Rule 701 may be used to cover assumed equity awards held by former service providers of the target company. 

Practical Impact: Removes a persistent deal-structuring complexity and could help to eliminate or otherwise alleviate actions previously utilized to accommodate equity awards held by former target service providers.

3. Recycling Form S-8 Filing Fees on Forfeited Equity Awards (CFI 126.46)

The Historical Problem: When a public company registers shares on Form S-8, it pays SEC registration fees upfront based on the aggregate offering price. If a participant’s equity awards were forfeited, the underlying shares and associated registration fees under the Form S-8 were no longer available for future use, often leading companies to register a conservatively higher amount of shares (to account for different share counting rules under the company’s equity plans versus the Form S-8).

The New Relief: The SEC clarified that where equity awards registered on Form S-8 are subsequently forfeited before vesting and the underlying shares return to the plan reserve for reissuance, the issuer may credit the previously paid registration fees associated with such returned shares against future registrations of offers and sales.

Practical Impact: Provides potential cost and administrative relief, as the CFI helps to more closely align Form S-8 share counting rules with those actually utilized for a company’s equity plan.

4. Form S-8 Registration Timing for Full Value Awards (CFI 126.47)

The Historical Problem: For shares underlying stock options, SEC guidance has long been clear that registration on Form S-8 can take place any time prior to the exercise of the option. However, in light of prior SEC guidance under Rule 701 that the shares underlying RSUs are considered to be “offered” and “sold” on the grant date, some practitioners have taken the position that Form S-8 registration for RSUs and restricted stock is required on or prior to the grant date. 

The New Relief: The SEC now explicitly permits public companies to register the offer and sale of shares underlying RSUs and restricted stock awards on Form S-8 at any time up to the vesting date, provided the company was eligible to use Form S-8 for such awards on the grant date.

Practical Impact: Significantly alleviates Form S-8 filing deadlines that companies routinely face when balancing establishment of new equity plan share reserves and increases to existing equity plan share reserves against contemplated grant timing for full value awards, and aligns Form S-8 timing across different types of compensatory equity awards.

5. Form S-8 Filing Fees for 401(k) Plan Investment in Employer Stock (CFI 126.19)

The Historical Problem: Public companies historically confronted confusion and uncertainty regarding which types of 401(k) plan contributions (e.g., employee elective deferrals, non-elective employer contributions, employer matching contributions and separate participant interests in the plans) require payment of a registration fee, because registration is generally triggered when employee dollars are directed into an employer stock fund.

The New Relief: The SEC clarified that public companies maintaining a 401(k) plan that offers an employer stock fund are required to pay registration fees only with respect to employee elective contributions and employer matching contributions, and only to the extent those contributions are invested in the employer’s securities. In addition, the SEC confirmed that while registration is required for an indeterminate amount of plan interests, no separate registration fee is required for such plan interests.

Practical Impact: Provides meaningful clarity and cost savings for public companies sponsoring 401(k) plans with employer stock funds. Companies can now calculate Form S-8 filing fees with certainty — i.e., excluding automatic (non-elective) employer contributions from the fee base and paying registration fees solely on the portion of employee elective deferrals and employer matching contributions that will be invested in employer stock, with no incremental fees for registering plan interests.

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