On May 19, the SEC announced two proposed rules to modernize the registered offering process and to simplify the public company reporting framework. The agency explained that these proposed rules were designed to incentivize companies to go and stay public by reforming the regulatory framework applicable to public companies.

The first proposal, which the SEC characterized as the most significant modernization of the registered offering framework in more than 20 years, would revise Form S-3 eligibility requirements by, among other things: (i) eliminating the $75 million public float threshold; (ii) removing the 12-month Exchange Act reporting seasoning requirement; and (iii) removing all transaction requirements currently included on Form S-3. The SEC said these proposed amendments could result in a more than 60 percent increase in the number of issuers eligible to offer an unlimited amount of securities on the form. The proposal would also extend registration and communication flexibilities currently reserved for “well-known seasoned issuers” to the broader set of issuers eligible to use Form S-3, expand preemption of state securities laws with respect to registration and qualification requirements to all registered offerings, and not just those listed or approved to be listed on a national exchange, and revise Form S-1 to improve issuers’ abilities to incorporate by reference information filed either before or after the form into Form S-1, to streamline filings by issuers.

The second proposal would streamline filer statuses for public reporting categories into two primary categories that cover all filers — “large accelerated filers” and “non-accelerated filers.” The proposed rule would raise the public float threshold for large accelerated filers from $700 million to $2 billion (with the threshold required to be met for two consecutive years), requiring at least 60 consecutive months of Exchange Act reporting before a company can become a large accelerated filer, and eliminating the currently used accelerated filer and smaller reporting company categories. The proposed rule would also formally define the “non-accelerated filer” status to include all registrants who are not large accelerated filers. All non-accelerated filers would receive disclosure scaling and other accommodations currently available to smaller reporting companies and emerging growth companies. These accommodations include exemption from the auditor attestation requirement on internal control over financial reporting. The proposed rule would also create a new subcategory of “small non-accelerated filers” (defined as those with total assets of $35 million or less) which would receive an additional 30 days to file Form 10-K annual reports and an additional five days to file Form 10-Q quarterly reports.

Comments on the filer status proposal are due by July 20, and comments on the registered offering reform proposal are due by July 27.