SEC moves to simplify filers

Paul Atkins said on May 19 that the Securities and Exchange Commission had proposed two rulemakings aimed at making it easier for companies to go public, raise capital and remain public. The SEC paired a registered offering reform package with a second proposal on emerging growth company accommodations and filer status, framing them as part of Atkins’s agenda to “Make IPOs Great Again.” (sec.gov) The SEC said the registered offering proposal would be the biggest modernization of that framework in more than 20 years. (sec.gov) The companion filer-status proposal would widen access to scaled disclosure and other accommodations now used by smaller reporting companies and emerging growth companies. (sec.gov) Here is what matters in the package, and where the practical changes would fall for issuers, lawyers, finance teams and the systems that support SEC reporting. ### What, specifically, did the SEC propose on May 19? The SEC said on May 19 that one proposal would rewrite parts of the registered offering process to increase “efficiency, flexibility, and cost savings” while keeping investor protections in place. (sec.gov) The agency said the changes would let more public companies use shelf offerings, expand some communication and registration flexibilities beyond today’s well-known seasoned issuers, broaden broker-dealer research coverage, and preempt state registration and qualification requirements for all registered offerings. (sec.gov) Paul Atkins said the two proposals were “among the first important steps toward transforming the SEC’s regulatory framework for public companies.” In his statement, he said the package was intended to help “small and mid-sized companies” and encourage them “to go and stay public.” (sec.gov) ### Which companies would get broader accommodations? The filer-status proposal would raise the threshold and seasoning requirements for large accelerated filer status, the SEC said. It would also extend to all non-accelerated filers certain scaled disclosures and accommodations that are now available to smaller reporting companies and emerging growth companies. (sec.gov) The SEC said those changes would reach about 81% of current public companies. New public companies would get those accommodations for at least five years under the proposal, according to the agency’s press release. ### Why does filer status matter to a reporting company? The SEC says filer status determines filing deadlines and some reporting requirements, including whether a company must provide an auditor attestation on internal control over financial reporting. (sec.gov) The agency classifies issuers primarily as large accelerated filers, accelerated filers or non-accelerated filers, based mainly on public float. Emerging growth company status is a separate concept. (sec.gov) The SEC says those companies can use scaled disclosure, provide two years of audited financial statements instead of three, defer some accounting-standard changes and use test-the-waters communications with certain institutional investors. ### What changes in the offering process stand out most? (sec.gov) Shelf offerings are one of the clearest operational changes in the package. The SEC said more public companies would be able to use them, allowing faster access to capital markets regardless of public float. Mark Uyeda said in a separate May 19 statement that the rules would update the SEC’s framework for shelf offerings and improve the registration and reporting system for smaller public companies. (sec.gov) Hester Peirce, in her own statement, backed the paired releases as part of a broader rethink of offering and reporting rules. (sec.gov) ### What should companies watch next? The SEC has posted both proposals in its rulemaking system as proposed rules. The filer-status release appears as Release No. 33-11419, and the registered offering reform release appears as Release No. 33-11418. The next step is the public comment process. Companies, trade groups, securities lawyers and investors can submit comments through the SEC’s rulemaking pages while the proposals remain pending before any final vote on adoption. (sec.gov 1) (sec.gov 2) (sec.gov 3) (sec.gov 4)