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Overview
On May 19, 2026, the Securities and Exchange Commission issued two companion proposing releases designed to constitute a coordinated capital formation package: (i) Enhancement of Emerging Growth Company Accommodations and Simplification of Filer Status for Reporting Companies (Release No. 33-11419), and (ii) Registered Offering Reform (Release No. 33-11418). Taken together, these proposals represent the Commission’s coordinated effort to structurally reduce compliance costs and eliminate outdated transactional impediments that have historically restricted public capital access to the largest market capitalization companies.
This recalibration of the regulatory framework reflects a broader policy objective aimed at revitalizing public market access; the scope of the proposed accommodations has, however, prompted renewed discussion regarding the appropriate balance between capital formation efficiency and investor protections. The filer status proposal addresses the complex matrix of overlapping public company compliance categories by eliminating the “accelerated filer” tier. The registered offering proposal would remove public float barriers to Form S-3 eligibility and well-known seasoned issuer (WKSI) status while preempting state-level “blue sky” registration requirements for registered offerings.
Key Takeaways
- Filer Tier Simplification: The proposal eliminates the “accelerated filer” category, leaving just two tiers: Large Accelerated Filers (LAFs) and Non-Accelerated Filers (NAFs). To qualify as an LAF, a company must have at least $2 billion in public float and 60 months of reporting history. Companies currently classified as accelerated filers would be reclassified as NAFs, gaining access to significant compliance relief. This reclassification alone would shift thousands of mid-size public entities that are currently accelerated filers into the NAF category.
- Broad Section 404(b) Relief (auditor attestation of internal controls over financial reporting): Universal exemption from Section 404(b) auditor attestation requirements for all NAFs in their annual reports, immediately impacting an estimated 81 percent of current public companies, representing approximately 6.5 percent of total market public float.
- Management would still assess internal controls over financial reporting (ICFR), but NAFs would not need an auditor attestation.
- Governance and Disclosure Scaling: In their periodic reports and proxy statements, NAFs would gain access to the scaled disclosures currently available only to Smaller Reporting Companies (SRCs) and Emerging Growth Companies (EGCs). This includes complete exemptions from Say-on-Pay, Pay Ratio, and Pay Versus Performance disclosures.
- Expanded Shelf Registration Access: The proposals would remove the $75 million public float requirement for Form S-3 shelf registration and the $700 million requirement for WKSI status, which provides automatic effectiveness. Instead, eligibility would depend on reporting history and compliance record, opening shelf registrations and WKSI benefits to a much broader range of issuers.
- Complete Blue Sky Preemption: All SEC-registered offerings would become “covered securities” under Section 18 of the Securities Act. This would preempt state-level registration and qualification reviews, allowing nationwide execution of public offerings without state-by-state clearance.
Rationalizing Filer Architecture
Release No. 33-11419 proposes to establish a streamlined two-tier regime by eliminating the middle-tier “accelerated filer” status entirely. As Chairman Paul S. Atkins stated, the Commission’s objective is to “harmonize and simplify the requirements for the myriad of public company categories and rationalize the benefits afforded to each category.” Under the proposed framework, issuers will evaluate their compliance obligations based on two primary categories:
LAF: An issuer with at least $2 billion in public float and 60 months of reporting history. LAFs must still comply with Section 404(b), meaning their auditors must attest to management’s assessment of ICFR.
NAF: Any company with less than $2 billion in public float. NAFs would be exempt from the Section 404(b) auditor attestation requirement. Management would still perform its own annual ICFR assessment under Section 404(a), but an independent audit of that assessment would no longer be required. Because of this, finance teams should not automatically scale back core internal accounting compliance infrastructures if the proposal is adopted, since only the external audit overlay would be eliminated.
Leveling the Disclosure Playing Field
Currently, scaled disclosures for periodic reports are fragmented across specific SRC and EGC definitions. Release No. 33-11419 proposes to extend these accommodations to the entire NAF designation. In their 10-Ks and proxy statements, NAFs could present streamlined executive compensation tables, file two years of audited financial statements rather than three, and present simplified Management’s Discussion and Analysis (MD&A) sections, reducing both preparation time and audit fees.
Beyond streamlined financial and compensation disclosures in periodic reports, NAFs would receive broad corporate governance relief in their proxy statements, including complete exemptions from shareholder advisory votes on executive compensation (Say-on-Pay, Say-on-Pay frequency, and golden parachutes), as well as exemptions from Pay Ratio disclosures and Pay Versus Performance presentation requirements.
This aligns with Chairman Atkins’s stated agenda to make “public company status more attractive” by “expanding existing benefits to more companies, simplifying the analysis required for a company to avail itself of those benefits, and enhancing certainty of how long a company receives them.” However, as an operational trade-off for these expanded reporting accommodations, the SEC will now require all filers (including the newly expanded NAF tier) to explicitly disclose any material unresolved SEC staff comments pursuant to Item 1B of Form 10-K.
Modernizing Offering Mechanics and Capital Access
Release No. 33-11418 proposes substantive modifications to the registered offering framework. For more than two decades, public float thresholds ($75 million for Form S-3 and $700 million for WKSI status) served as eligibility requirements for short-form registration and enhanced offering benefits. The proposed rules would eliminate public float as a determinant of an issuer’s eligibility for these benefits. For small- and mid-cap issuers, this change removes the volume restrictions under General Instruction I.B.6 of Form S-3, which historically capped issuers with less than $75 million in public float from selling more than one-third of their float in primary offerings over any rolling 12-month period. Without these caps, qualifying issuers could raise capital in larger amounts and on faster timelines.
Under the amended framework, eligibility would depend primarily on an issuer’s reporting history and compliance record. Specifically, being current and timely in Exchange Act reporting, rather than market capitalization, would determine eligibility. This shift grants access to Form S-3 shelf registrations, automatic WKSI effectiveness, and liberalized communications to a much broader set of issuers. In practice, a mid-cap company with a clean compliance record could file a shelf registration and begin selling securities immediately, without waiting for SEC staff review.
The proposal also introduces new issuer categories: “Eligible Listed Issuer” (ELI) and “Seasoned Eligible Listed Issuer” (SELI). An ELI is an exchange-listed issuer that meets Form S-3 eligibility requirements. A SELI is an ELI that has been subject to Exchange Act reporting for at least 12 calendar months, entitling it to automatic shelf registration benefits. ELIs, including SELIs, would also gain access to “pay-as-you-go” registration fees, allowing them to defer SEC filing fees until securities are actually sold from a shelf registration. These new categories extend expanded access to pre-filing communications and registration benefits to a broader pool of seasoned issuers.
The proposal imposes strict carve-outs for Foreign Private Issuers (FPIs). FPIs would be prohibited from utilizing domestic registration forms (Forms S-1 and S-3) even if they voluntarily file domestic Exchange Act reports. FPIs will not benefit from the elimination of the $75 million public float requirement; they remain entirely subject to legacy Form F-3 eligibility thresholds and existing WKSI eligibility criteria.
Federal Preemption of State Blue Sky Requirements
State-by-state registration and qualification clearance can add weeks to an offering timeline and introduce substantial legal costs. The proposed rules would exercise the Commission’s authority under Section 18(b)(3) of the Securities Act to define “qualified purchaser” to include securities offered and sold through a registered offering, thereby classifying all registered offerings as “covered securities.” This classification would preempt state securities law registration and qualification requirements for every SEC-registered transaction. Issuers could then execute nationwide public offerings without navigating a patchwork of state filings, reducing both deal costs and execution risk. As the SEC explained, registered offerings “are inherently national in nature” and often involve offers and sales to investors regardless of their location, making state-by-state review “a difficult and inefficient task.”
This complete preemption would be particularly transformative for continuous offering vehicles, such as public non-traded real estate investment trusts (REITs), which currently face substantial state-by-state qualification hurdles. The SEC has actively requested comment on whether it should narrow this preemption to apply only to certain types of registered offerings.
Form S-1 Modernization
For issuers that do not qualify for short-form registration, the proposed rules would remove the long-standing prohibition against forward incorporation by reference on Form S-1. Under the proposed amendments, all reporting companies (not just those meeting specific float targets) would be permitted to incorporate by reference both backward (from previously filed reports) and forward (from subsequently filed Forms 10-K and 10-Q), provided they satisfy basic reporting seasoning requirements. In practice, this means issuers using Form S-1 would no longer need to manually update the registration statement each time they file a new periodic report; future filings would automatically become part of the registration statement. This reform narrows the operational efficiency gap between a standard registration statement and a flexible shelf prospectus. Blank check companies, shell companies, and penny stock issuers (collectively, “BSP issuers”) would remain ineligible to incorporate by reference on Form S-1.
Technical Implementation & Transition Mechanics
To facilitate an orderly market transition, the proposing releases outline specific compliance timelines and procedural pathways for issuers navigating both the simplified filer architecture and the modernized offering framework:
- Small Non-Accelerated Filer (SNF) Details: NAFs with total assets of $35 million or less receive extended filing deadlines of 120 days for Form 10-K and 50 days for Form 10-Q, giving smaller companies more time to prepare their reports.
- FASB Compliance Deferrals: In their periodic reports, newly public NAFs may delay compliance with new accounting standards from the Financial Accounting Standards Board (FASB) for up to five years after their initial registration. This gives companies more time to adapt their accounting systems and reduces the burden of implementing new standards while simultaneously adjusting to life as a public company.
- Retained EGC Distinctions (Confidential Submissions & CAMs): The SEC is explicitly not extending certain EGC-specific accommodations to the broader NAF category. Specifically, non-EGC NAFs will not be permitted to utilize Section 6(e) confidential draft registration statement submissions, nor will they receive exemptions from the Public Company Accounting Oversight Board (PCAOB) requirement to communicate critical audit matters (CAMs) in their audit reports.
- Exclusions for Ineligible Issuers: BSP issuers remain excluded from the expanded S-1, S-3, and WKSI-like benefits. However, former special purpose acquisition companies (SPACs) are explicitly carved out; that is, they will not be classified as shell companies solely because of their prior SPAC status, meaning de-SPACed operating companies can access the full range of new benefits.
- Filer Status Transition Rules: Public float will be measured using the average stock price over the last 10 trading days of an issuer’s second fiscal quarter (ending on or before June 30 for calendar year issuers). However, a single year’s measurement will not trigger a status change. An issuer’s filer classification changes only if the same result (meeting or missing the threshold) occurs for two consecutive fiscal years.
- Comment Deadlines: Public comments on the filer status proposal (Release No. 33-11419) are due by July 20, 2026. Comments on the registered offering reform proposal (Release No. 33-11418) are due by July 27, 2026.
Next Steps for Public Issuers
As public issuers evaluate whether these proposals will extend access to previously unavailable shelf registrations, WKSI benefits, or scaled periodic report disclosures, management teams should carefully balance anticipated reductions in ongoing administrative expenditures against heightened scrutiny from institutional investors and proxy advisors (such as ISS and Glass Lewis) regarding governance protections. Companies also should audit their existing debt covenants, institutional investor guidelines, and current shelf registration strategies against the new public company compliance matrix. For instance, credit facilities frequently incorporate audit protections, 404(b) standard maintenance requirements, and reporting timeline covenants that may require negotiation with commercial banking partners even as SEC-level compliance obligations are reduced.
Our securities and capital markets attorneys are available to assist in navigating both the technical measurement rules and the broader strategic implications of this evolving regulatory landscape, including preparing comment letters on either or both proposals.
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