How Will the SEC's Registered Offering Reform Proposal, if Adopted, Affect de-SPACs?

In February this year, we wrote about how certain stock exchange rules have made going public via a “de-SPAC” transaction with a special purpose acquisition company or “SPAC” (whether currently or formerly listed) preferable over a reverse merger with a shell company. (Read our Quick Take about it: Going Public: Business Combination with a SPAC vs. Reverse Merger with a Non-SPAC Shell Company.) On March 19, 2026, the SEC proposed new rules to encourage more registered offerings by making the short-form Form S-3 registration statement available to a broad base of public companies. How will these new rules, if adopted, affect these companies' ability to raise capital in the public market? Will these new rules public companies equally benefit public companies that are former SPACs as opposed to former non-SPAC shell companies? 

What are the proposed new Form S-3 eligibility requirements?

The SEC believes that eligibility to use Form S-3 for short-form and shelf registration should be based on the continuous availability of timely issuer-specific information in Exchange Act reports and not on the length of the issuer’s reporting history, size of its public float or securities analysts’ coverage. Under the SEC’s Registered Offering Reform Proposal announced on March 19, 2026, companies would no longer be required to be subject to the Exchange Act reporting obligations for 12 months before they can use Form S-3 registration statement for registered offerings. Instead, they just need to be current and timely with respect to their Exchange Act reports (other than Form 8-K) for the preceding 12 months or such shorter period since they have become subject to such reporting obligations at the time of the Form S-3 filing. One untimely filing also would not result in the loss of Form S-3 eligibility so long as (i) the untimely filing is made within seven calendar days of the original due date (or by the due date extended pursuant to Rule 12b-25); and (ii) there is only one untimely filing during the preceding 12 months or such shorter period. 

Under the proposed rules, companies would no longer be required to have at least $75 million in public float to register an unlimited amount of securities in a shelf registration on Form S-3. The SEC estimates that eliminating the $75 million public float requirement alone could result in an increase of over 60% in the number of issuers eligible to offer an unlimited amount of securities on Form S-3. 

Who will benefit most from these new rules?

The SEC’s Registered Offering Reform Proposal expands the availability of shelf registration to newly public companies and smaller companies, regardless of their maturity or size, so they too can benefit from the speed to market and cost savings associated with the use of the Form S-3 registration statements to conduct registered offerings. Regardless of their public float, newly public companies would immediately become eligible to use the Form S-3 to conduct shelf offerings (of an unlimited amount of securities), follow-on, at-the-market (ATM) and resale offerings. This is a game changer for the newly public and small to mid-sized companies which, under the current rules, must have been subject to Exchange Act reporting obligations for 12 months before they can use Form S-3 for registered offerings. 

What is a “BSP issuer”? 

In its effort to facilitate capital formation in the public market, the SEC is not willing to compromise on investor protection. The SEC is particularly concerned that penny stock and blank-check offerings, as well as shell companies, may give rise to disclosure and offering related abuses. Therefore, under the proposed rules, a “BSP issuer” is specifically prohibited from using Form S-3 for the proposed offering-related accommodations or certain disclosure-related relief. A “BSP issuer” is defined as an issuer that is, or during the past three years the issuer or any of its predecessors was, a blank-check company, a shell company (except for a SPAC) or an issuer with a penny stock offering. 

A SPAC is specifically carved out from the definition of a BSP issuer. In other words, an issuer that otherwise would be barred from using Form S-3 solely because it or its predecessor was a SPAC during the preceding three years would be excepted from the three-year lookback for shell companies and can use Form S-3 if it was not a shell company at the time of its Form S-3 filing. This is consistent with the SEC’s position when it adopted rules for SPACs in 2024 that a de-SPAC transaction more closely resembles an initial public offering of the target company than a reverse merger transaction. On the other hand, an issuer that has gone public as a result of a reverse merger with a shell company would need to wait for three years before it can be Form S-3 eligible under the proposed rules. 

What about Foreign Private Issuers (FPIs)?

In June 2025, the SEC published a FPI Concept Release soliciting public comment on whether the definition of "foreign private issuer" should be amended. Given the ongoing comprehensive review of the FPI framework, the SEC has not proposed to extend the benefits of these new rules to FPIs at this time. Under the proposed rules, FPIs would be prohibited from using Form S-3 for their registered offerings. Instead, they would continue to use Form F-3 after they have filed their Exchange Act reports for 12 months. No changes to the current eligibility requirements for Form F-3 have been proposed. 

What’s next?

The Registered Offering Reform Proposal, the Filer Status Proposal (also announced by the SEC on March 19, 2026) to extend current disclosure scaling and to simplify the current filer status framework, together with the proposed rules (announced by the SEC on May 5, 2026) to give public companies the option of filing semiannual reports in lieu of quarterly reports, are all rulemaking initiatives designed to incentivize more domestic companies to go public and stay public in the U.S. Future proposals under the SEC’s agenda to Make IPOs Great Again include reform of the Regulation S-K disclosure requirements to “rightsize the SEC’s disclosure requirements through the lenses of materiality.” All rule proposals will be subject to a 60-day public comment period. Depending on the received comments, among other things, the SEC may choose to modify one or more rule proposals before any of them are adopted and become effective. So, definitely stay tuned!