Make IPOs Great Again: Your First Look at How the Rulemaking Pieces Fit Together

As detailed in this Cooley alert – SEC Proposes Broad Expansion of Shelf Registration Access and Capital Markets Efficiencies – Form S-3 is often used for “shelf” offerings and at-the-market offerings. Under current rules, an issuer must meet certain issuer eligibility requirements to use Form S-3, which include being subject to Exchange Act reporting for at least 12 calendar months.

Form S-3 is also currently available only for certain types of transactions. The most common transaction-based limitation is colloquially known as the “baby shelf” limitation, which applies to primary offerings by issuers having a public float of less than $75 million and limits these issuers to selling no more than one-third of their public float during a rolling 12-month calendar period. For all practical purposes, the baby shelf limitation substantially impairs the utility and flexibility of Form S-3 by issuers subject to that limitation. The proposal would dramatically simplify and expand the universe of issuers eligible to use Form S-3 and extend a variety of registration and communication flexibilities to exchange-listed issuers. Among other changes, it would:

• Eliminate the one-year seasoning requirement and $75 million public float threshold impacting Form S-3 eligibility. This would enable issuers to use Form S-3 immediately after going public or completing a deSPAC transaction and would eliminate the “baby shelf” limitations that currently apply to issuers with less than $75 million in public float. The proposal would simplify eligibility determinations overall.
• Replace the domestic well-known seasoned issuer (WKSI) framework with two new categories, which issuers would assess on an annual basis – eligible listed issuers (ELIs) and seasoned eligible listed issuers (SELIs). ELIs would gain access to most benefits currently reserved by WKSIs, other than automatic shelf registration. Approximately 74% of Exchange Act reporting issuers would qualify as SELIs and be eligible to use automatic shelf registration, compared to only 36% under the current WKSI framework. The proposal would retain the WKSI category for foreign private issuers (FPIs).
• Eliminate blue-sky registration requirements across the board, by making all federally registered offerings “covered securities.” This would be helpful for life sciences and other issuers that routinely conduct registered direct offerings pairing listed common stock with non-exchange-listed warrants.

It is worth noting that while the proposed amendments would extend the ability to conduct shelf offerings to more issuers, they also would prohibit certain “ineligible issuers,” as defined in Rule 405 of the Securities Act, from using Form S-3. These “ineligible issuers” could include issuers that currently are eligible to use Form S-3 but would become ineligible under the proposed amendments. For example, as explained more precisely in the release, issuers that within the past three years have been subject, at the parent or subsidiary level, to any judicial or administrative decree or order relating to violating the antifraud provisions of Federal securities laws, may lose their ability to use Form S-3. That change may create significant capital raising limitations for some companies. The SEC has requested comment on whether to adopt a transition period for these issuers to preserve their Form S-3 eligibility for a time after the rules go into effect, as well as whether issuers should be permitted to request eligibility waivers from the SEC’s Division of Corporation Finance.

The SEC has proposed a sweeping simplification of the public company filer status framework, collapsing the current patchwork of five partially overlapping categories – Large Accelerated Filer (LAF), accelerated filer, Non-Accelerated Filer (NAF), smaller reporting company and emerging growth company into just two: LAF and NAF. This Cooley alert – SEC Proposes Simplified Filer Status Rules and Expanded Disclosure Accommodations – summarizes the proposal. Here are a few key takeaways:

• The LAF threshold would nearly triple – from $700 million to $2 billion in public float – and the LAF status would not apply until a company had at least 60 consecutive calendar months of reporting. If adopted, approximately 80% of all public companies would qualify as NAFs and gain access to significantly scaled disclosure requirements – either because they have less than $2 billion in public float or because they completed their IPO less than five years ago.
• NAF status would carry substantial relief: An exemption from the costly Sarbanes-Oxley Act Section 404(b) ICFR auditor attestation requirement, reduced executive compensation disclosure obligations (no CD&A, pay ratio, pay versus performance or say-on-pay vote requirements), and only two years of financial statements (with reduced presentation requirements) and MD&A. Under current rules, these disclosure accommodations are unavailable to accelerated filers.
• Every company going public – regardless of size – would be guaranteed a minimum five-year on-ramp before LAF obligations kick in, giving even large-cap IPO companies far more time to build the infrastructure and budget to support full-scale SEC reporting requirements.

As explained in this Cooley alert – The SEC’s Semiannual Reporting Proposal: Fare Thee Well Quarterly Reporting? and this May 13, 2026 CapitalXchange blog, the SEC proposed rules that would create a voluntary semiannual reporting pathway. The proposal elaborates on various potential alternatives – but essentially, companies could elect on an annual basis whether to file a semiannual report on a new Form 10-S in lieu of filing three quarterly reports on Form 10-Q. Companies should know:

• Semiannual reporting may be particularly appealing to newly public companies, smaller issuers, and pre- or lower-revenue companies. Companies should carefully weigh their investor base, financing needs, debt covenants and analyst coverage to determine which reporting cadence best fits their needs.
• Switching to semiannual reporting presents potential consequences – including less frequent shelf registration statement updates, potential extended insider trading blackout periods and Rule 10b5-1 cooling-off periods for insiders, tensions with current practices for underwriter comfort letters in capital raises, and potential information asymmetries between semiannual and quarterly reporting companies – making careful advance planning essential.
• The proposal would also simplify the financial statement staleness framework that applies to registration and proxy statements. The proposal would replace the current day-count tests with a requirement that, generally, a registrant include interim financial statements – as of the end of the most recently completed fiscal quarter (for quarterly filers) or semiannual period (for semiannual filers) – that have been filed, or were required to be filed, on or before the relevant filing date.

The SEC’s 2024 climate disclosure rules were stayed in response to legal challenges; the rescission proposal would formally remove them from the books. This Cooley alert – SEC Proposes to Rescind 2024 Climate-Related Disclosure Rules – explains that the proposal would withdraw all amendments to Regulation S-K (including Items 1500 through 1508), Regulation S-X, Regulation S-T, Securities Act Rule 436, and related Securities Act and Exchange Act registration statement and report forms, including Forms S-1, S-3, S-4, S-11, F-3, F-4, 10, 10-Q, 10-K and 20-F. Here are a few other key takeaways derived from the alert:

• The 2024 climate rules never went into force. Consequently, the proposed rescission won’t have a big practical impact on companies’ SEC reporting obligations.
• Principles-based disclosure obligations continue to apply. Rescission of the 2024 rules would not eliminate federal securities law obligations to disclose climate-related information that is material to a company’s specific circumstances. Existing requirements under Regulation S-K, including Items 101 (business description), 103 (legal proceedings) and 105 (risk factors), along with MD&A requirements, continue to require disclosure of material climate-related risks and opportunities. The proposed rescission would mark a return to the SEC’s general principles-based approach to disclosure of climate-related matters, which uses performance standards based on the concept of materiality. Companies should continue to assess whether their climate-related risk disclosures reflect a current and accurate picture of the risks they face.
• Rescission of the 2024 rules would eliminate the federal climate disclosure framework but would not affect state-level requirements – such as California’s climate disclosure laws, SB 253 (greenhouse gas emissions disclosure) and SB 261 (Climate-Related Financial Risk Act), the latter of which is currently subject to an ongoing stay in the US Court of Appeals for the Ninth Circuit. Rescission also would not affect international reporting obligations, including the EU’s Corporate Sustainability Reporting Directive. Many companies also continue to voluntarily report on climate and other environmental, social and governance topics.

Since 1972, the “neither admit nor deny” policy, which was codified in Rule 202.5(e) of the SEC’s informal rules and procedures, said that the Commission wouldn’t settle enforcement actions involving sanctions unless the defendant or respondent agreed not to publicly deny the allegations in the complaint or administrative order. Most federal agencies do not have a similar type of rule. Over time, the rule created the impression among some that the Commission was trying to shield itself from criticism.

In light of the rescission of Rule 202.5(e), the Commission announced that it would not enforce existing no-deny provisions that had been entered prior to the rule change. In the event of a breach of an existing no-deny provision, the Commission will take no action to ask a district court to vacate a settlement (or to reopen an adjudicatory proceeding) in connection with the terms of the settlement agreement.

The Commission generally does not require settling defendants to admit to allegations. Rescinding the “gag rule” does not affect the SEC’s practice related to admissions in settlements, its discretion to settle with defendants who decline to admit facts or liability, or its discretion to negotiate for admissions as part of a settlement.

For public companies and their counsel, the practical takeaway is that settlement negotiations now carry less reputational risk. A company that disagrees with the factual characterizations in an SEC complaint is no longer contractually barred from saying so – which may, at the margins, make settlement a more viable option for some companies. The SEC also noted that making settlements more palatable for defendants could benefit investors by accelerating the agency’s ability to collect and, if feasible, distribute collected monetary sanctions to injured investors.