On May 19, 2026, the SEC proposed wide-ranging amendments to the registered offering process for operating companies along with parallel reforms for registered closed-end funds and business development companies (BDCs) that register securities on Form N-2 (collectively, “affected funds”). The proposal builds on the SEC’s 2020 offering reforms for these funds and is intended to reduce regulatory burdens, allowing affected funds to bring offerings to the market more quickly and to respond to market opportunities as they arise. If adopted, the proposal would significantly expand the population of exchange-listed affected funds that are able to utilize the shelf registration process.
Under current SEC rules, exchange-listed affected funds generally must have a public float of at least $75 million to file a short-form registration statement on Form N-2 that is used for shelf registrations, and at least $700 million in public float to qualify as a well-known seasoned issuer (WKSI) eligible for the most streamlined offering benefits, including automatic effectiveness of shelf registration statements upon filing. The SEC’s proposal would replace the existing public float-based eligibility requirements with the following two categories of issuers: (1) eligible listed issuer (ELI) would be any exchange-listed affected fund that is current and timely in its reporting required under the Securities Exchange Act of 1934 and the Investment Company Act of 1940 over the preceding 12 calendar months (or shorter period during which reporting was required); and (2) seasoned eligible listed issuer (SELI) would be an ELI that has been subject to Exchange Act and Investment Company Act reporting requirements for at least 12 calendar months. Key changes for exchange-listed affected funds would include the following:
- Short-form Form N-2 shelf registration would be available to all ELIs, regardless of public float, and automatic shelf registration under Rule 462(e) of the Securities Act of 1933 would be available to SELIs (currently available only to WKSIs);
- Pre-filing communications permissible under Rules 163 and 163A of the Securities Act would be available to all ELIs (currently limited to WKSIs); and
- “Pay-as-you-go” registration fees would be available to all ELIs (currently limited to WKSIs).
The short-form Form N-2 shelf registration framework would remain unavailable to unlisted affected funds, including most interval funds and tender offer funds, which would continue to rely on the existing Rule 486 registration and offering process.
The proposal would also preempt state securities law registration and qualification requirements for all registered offerings. Currently, shares of BDCs and real estate investment trusts (REITs) that are not listed on an exchange or issued by a registered investment company do not qualify as “covered securities” under Section 18(b) under the Securities Act. Therefore, those shares generally must meet registration and qualification requirements in each state in which they are offered and sold. The SEC’s proposal would redefine “qualified purchaser” under Section 18(b)(3) under the Securities Act to include any person to whom securities are offered or sold pursuant to a registered offering, thereby making the securities sold to qualified purchasers “covered securities” under Section 18(b) and exempt from state registration and qualification review. This proposal, if adopted, would relieve issuers of non-listed BDCs and REITs of the multistate, often disparate registration process that currently applies to their offerings. However, state notice filing and fee requirements would continue to apply.
