By Dave Peinsipp, Jon Avina, Rich Segal, Brad Goldberg, Milson Yu, Logan Tiari, Allie Anderson and Liz Dunshee
As discussed in this June 2026 CapitalXchange blog, the SEC has proposed rule changes aimed at expanding access to the shelf registration framework and simplifying eligibility criteria. If the rule is adopted and works as intended, it would make it easier for many companies to conduct delayed and continuous offerings, including at-the-market offerings – although there are some important caveats, as discussed below. Additionally, as noted in this July 2026 CapitalXchange blog, SEC Chair Paul Atkins is seeking input on how to modernize the process for IPOs and other paths to the public market.
Cooley recently submitted a comment letter to the Commission in response to this request for input. The firm represents thousands of emerging, growth-stage and large-cap companies, as well as the investment vehicles that fund them, across technology, life sciences and other industries. These initiatives are important to our clients, and we welcomed the opportunity to share feedback based on that experience.
Our recommendations focus on four practical areas where we see longstanding friction in the capital-raising process and opportunities for modernization without sacrificing appropriate investor protections. These are: Communications throughout the IPO process, ordinary course business communications, compensatory equity resales and access to shelf registration. Our comment letter suggests changes to existing rules to address these issues, while the underlying objectives are also relevant to the Commission’s broader rethinking of the IPO framework. Here’s what we suggested and why it matters.
IPO communications: Make the rules work across the IPO timeline
The SEC’s current communications rules can be overly restrictive on companies in the lead-up to an IPO, particularly when IPO execution timing is uncertain, and make it difficult for companies to know when offering-related communications restrictions have ended. We recommend clearer, more flexible rules that preserve appropriate liability and investor protections while also reducing unnecessary communications friction.
1. Expand Rule 433’s utility after an IPO issuer has publicly filed its Form S-1. We recommend allowing issuers to use a free writing prospectus (FWPs) more liberally, including once a Form S-1 is publicly available (even if it does not yet include a price range) and for the purposes of updating the Section 11 disclosure package (in addition to the Section 12 disclosure package). This would allow issuers to more quickly and seamlessly respond to adverse third-party developments, provide ordinary course updates that may be meaningful to investors and update deal sizing and pricing terms prior to S-1 effectiveness.
2. Modernize Rule 163A. We recommend eliminating difficult-to-administer, outdated safe harbor elements and making the safe harbor available to underwriters.
3. Eliminate Rule 174 and clarify when IPO communications restraints end. We recommend modifying the dealer prospectus delivery framework such that issuers would no longer be responsible for updating their IPO prospectuses after the underwriting syndicate breaks (i.e. once orders are confirmed). Currently, issuers must “sticker” their prospectuses for a period of 25 days following the IPO if there are material changes to the disclosures contained there. However, we believe that issuers’ compliance with their Form 8-K obligations provide investors with sufficient current information in this regard.
Ordinary course communications: Let companies keep doing business
Preparing for an IPO should not unnecessarily prevent a company from communicating with employees, customers, partners or other business audiences. The current rules can be difficult to apply in a world of social media, digital distribution and overlapping audiences, where a communication intended for customers or employees may also reach investors and the media. We recommend modernizing the safe harbors so companies can continue appropriate ordinary course communications without unnecessarily losing the benefit of communications safe harbors or triggering Section 5 concerns.
4. Revise Rules 169 and 168 to better reflect ordinary course communications. We recommend modernizing the rules to further enable ordinary course and customary communications, including at investor and industry conferences, so long as the communications do not refer to a securities offering. Because issuers cannot control commentary or context that journalists may include in media reports, we also recommend clarifying that no offer of securities under Section 5 of the Securities Act has occurred merely because a media article that includes commentary from the issuer mentions a securities offering, so long as an issuer can represent that it did not speak to the offering during the interview.
5. Adopt a targeted safe harbor for employee, customer and partner communications. We recommend that the Commission adopt a new safe harbor so that communications with employees – and appropriate communications with customers and partners – would not constitute impermissible offers under Section 5 of the Securities Act if specified legends are included and reasonable guardrails are satisfied.
Compensatory equity: Modernize outdated restrictions
6. Update rules governing compensatory equity in IPOs to better reflect the economics of the award and the information already available to the market. Employees of newly public companies often face burdensome resale restrictions for their equity awards. Because the employees received securities as compensation rather than as part of a capital-raising transaction, and because the restrictions continue even after investors have received the IPO prospectus, these burdens can be disproportionate to any investor-protection benefit that the restrictions provide.
To mitigate burdensome resale restrictions, we recommend revisiting the date-of-sale position for restricted stock units, removing the 90-day public reporting requirement under Rule 144(c) and Rule 701(g) and providing practical relief for option exercise resales, among other things.
Shelf registration: Keep compliance consequences proportionate
The SEC’s proposal to expand access to Form S-3 will be less meaningful if an isolated reporting lapse or an overbroad disqualification can take away baseline shelf access even where investors continue to have current issuer information. We support meaningful consequences for disclosure and reporting violations – but recommend more targeted remedies where those consequences would otherwise be disproportionate.
7. Expand the grace period or cure mechanism for missed Form 8-Ks. With respect to the SEC’s registered offering reform proposal, we recommend expanding the grace period or cure mechanism for missed Form 8-Ks in determining Form S-3 eligibility.
8. Narrow the proposed ‘ineligible issuer’ limitations on using Form S-3. We recommend that the Commission reconsider its proposal to restrict baseline shelf registration access for “ineligible issuers” and instead consider imposing consequences relating to automatic effectiveness and enhanced communication benefits. This approach would preserve a meaningful consequence for disclosure-related violations while allowing an issuer to continue using a filed shelf registration process subject to applicable SEC review and antifraud liability. If the Commission nevertheless retains a Form S-3 eligibility consequence, it should consider limiting the disqualification to issuer-level violations or creating a carve-out for subsidiary-level conduct that is not material to the issuer’s own disclosure record or shelf offering program.
Cooley’s latest comment letter builds on our April 2026 recommendations to the SEC on simplifying Regulation S-K and our August 2025 comments on executive compensation disclosure rules. As the SEC continues to consider how to modernize the disclosure and capital-raising framework, Cooley will continue to advocate for approaches that make it easier to access the public markets and operate as a public company while reinforcing market quality. The recommendations in our latest letter identify practical friction points and the policy objectives that we believe modernization should address, which may come from targeted changes to existing rules or structural reforms to the framework itself. We will share strategic and practical considerations for companies as the Commission’s agenda develops.
Questions? Please reach out to the Cooley capital markets team.
