SEC delivers on promise of reforms

Semi-annual reporting

On May 5, the SEC proposed to eliminate the requirement of US domestic issuers to file quarterly reports on Form 10-Q, thereby permitting the filing of a single semi-annual report on Form 10-S for the first six months of each fiscal year. This proposal, however, does not apply to foreign private issuers (FPIs)—including Canadian issuers reporting under the MJDS—as the SEC does not require quarterly reports for FPIs, instead only requiring FPIs to furnish on Form 6-K any interim financial reports required by the laws of the home country (e.g., Canada)—in addition to any applicable requirement to update financial statements pursuant to the form requirements of outstanding SEC registration statements.

For US domestic reporting issuers, it remains to be seen whether, how quickly, and in which industries we will see a shift to semi-annual reporting, and how market practice will develop following adoption of the proposed rules; for example, companies might issue quarterly earnings releases voluntarily for the first and third quarters in lieu of form-compliant quarterly reports.

SOX and SEC registration statement reforms

On May 19, the SEC proposed two significant reforms. The first would modify the thresholds for SEC filer status, allowing a much larger percentage of US domestic reporting companies to be exempt from some of the more onerous SEC requirements, including auditor attestation under Section 404(b) of the Sarbanes-Oxley Act of 2002 (SOX 404(b)). The second would simplify the registered offering process, permitting issuers to conduct offerings more quickly and efficiently by eliminating most of the issuer and transaction requirements for Form S-3 (which is used for US shelf offerings), and permitting more US domestic companies to file an S-3 as an automatically effective registration statement without SEC review.

The rule proposals, currently aimed at US issuers only, represent a sea change for SEC regulatory requirements. Specifically, by raising the threshold for “non-accelerated filer” status from a public float of US$75 million (under current SEC rules) to US$2 billion, it is anticipated that about 80% of all US public companies will qualify for this status, which in turn will exempt these issuers from SOX 404(b) auditor attestation—one of the greatest regulatory burdens for US public companies—and from other SEC requirements, such as “say-on-pay”, “pay-versus-performance” and pay-ratio disclosure requirements in connection with the annual proxy statement, and will provide those issuers with longer deadlines to file annual and interim reports.

In a companion rule proposal, the SEC proposed making Form S-3 available to nearly all US domestic companies by eliminating the 12-month reporting history and US$75 million public float requirements and, for US-listed issuers that have been SEC reporting for at least 12 months, allowing Form S-3 to become automatically effective upon filing with the SEC—a benefit currently only available to “well-known seasoned issuers” (WKSIs) with a public float of at least US$700 million. These changes will facilitate follow-on offerings in the first year post-IPO, and allow smaller issuers to tap the US capital markets in a more streamlined fashion.

Rules for foreign private issuers left unchanged—for now

In these rule proposals, the SEC made it clear that, for the time being, none of these accommodations are being extended to foreign private issuers, in light of the SEC’s ongoing evaluation of its rules for FPI accommodations, announced in its June 2025 concept release¹. Nevertheless, these SEC proposals are not yet effective, are currently subject to a public comment period, and are subject to the SEC issuing final rules, which may be different from the rules as proposed.

We will continue to monitor what similar accommodations the SEC may propose for foreign private issuers. If the FPI concept release is any indication, it is possible that any changes to the FPI regime would vary based on the country involved and the extent of the home-country securities regulation. It also seems likely that the MJDS for Canadian issuers would remain intact, and possible that the SEC would extend MJDS-like reporting structures to other jurisdictions.