SEC Division Director Defends Proposals to Expand Shelf Registration

SEC Corporation Finance Division Director Jim Moloney highlighted two pending SEC proposals that would (i) give smaller public companies access to shelf registration and (ii) raise the public-float threshold that triggers the most demanding disclosure obligations (See prior coverage).

In remarks at the U.S. Chamber Capital Markets Summit, Mr. Moloney described the proposals as an effort to strip away disclosure requirements layered onto public companies over decades. He explained that the proposals respond to the decline in the number of exchange-listed companies by roughly 40 percent since the mid-1990s, when more than 7,800 companies were listed.

He said the Registered Offering Reform Proposal would expand eligibility for shelf registration by more than 60 percent, opening it to smaller companies for the first time in decades. He said that the current shelf registration Form S-3, which requires a $75 million public float and a 12-month reporting history would be replaced with two questions: whether the company was an "ineligible issuer" and whether the company was current in its SEC reporting.

Mr. Moloney said the Filer Status Proposal would raise the Large Accelerated Filer threshold from $700 million to $2 billion in public float, reserving the strictest requirements for the largest companies. He said the change would likely lower audit fees and other costs for 81 percent of public issuers, which represented 6.5 percent of total market public float.