Encouraging Public Offerings Act of 2026
- Sponsor
- Sen. Budd, Ted [R-NC]
- Committees
- Banking, Housing, and Urban Affairs Committee (primary)
- Last action
- Jun 4, 2026
Bottom line
The bill aims to reduce regulatory burdens and costs associated with going public, potentially encouraging more companies to enter public markets by extending existing flexibilities to a broader range of issuers.
What it actually does
This bill amends the Securities Act of 1933 to expand two key flexibilities, currently primarily available to 'emerging growth companies' (EGCs), to a broader range of issuers: the ability to 'test the waters' with qualified institutional buyers and accredited investors, and the ability to submit draft registration statements confidentially to the SEC for review. It also grants the SEC authority to impose additional requirements on non-EGCs utilizing these expanded privileges.
Proponents argue
Proponents argue that this legislation will streamline the initial public offering (IPO) process, reduce associated costs, and make public markets more accessible, particularly for companies that are not EGCs. They contend that these provisions have proven successful for EGCs under the JOBS Act, fostering capital formation and economic growth without compromising investor protections, and that expanding them will further enhance U.S. capital market competitiveness.
Opponents contend
Opponents might argue that expanding these provisions to all issuers, especially larger or more established companies, could diminish investor protections by delaying public transparency during critical pre-IPO phases. They may raise concerns about potential information asymmetry, where sophisticated investors gain early access to information that retail investors receive later, potentially creating an uneven playing field.
The bill is very short and straightforward, allowing ample time for a thorough evaluation of its provisions and implications.
Section 2(1) amending Securities Act of 1933, Section 5(d)
Expansion of 'Testing the Waters' Communications
This provision amends Section 5(d) of the Securities Act of 1933 to allow any issuer, not just emerging growth companies (EGCs), to engage in oral or written communications with qualified institutional buyers (QIBs) and accredited investors to gauge interest in a potential offering. These communications can occur before or after filing a registration statement, providing companies with greater flexibility in assessing market demand.
Supporters argue
Proponents argue that this expansion reduces uncertainty and costs for companies considering an IPO, allowing them to better tailor offerings and attract investors. They point to the success of these provisions for EGCs as evidence that they facilitate capital formation without harming investor protection.
Critics contend
Opponents might argue that this provision creates an uneven playing field, giving sophisticated investors early access to material information that retail investors will not have until later. This could lead to information asymmetry and potentially disadvantage less sophisticated investors.
Tradeoffs
The provision balances the desire to provide issuers with flexibility in gauging market interest and reducing IPO costs against concerns about ensuring equitable access to information for all investors.
Section 2(1)(C) adding Securities Act of 1933, Section 5(d)(2)
SEC Authority for Additional Requirements on 'Testing the Waters'
This provision grants the Securities and Exchange Commission (SEC) the authority to issue new regulations, following public notice and comment, to impose additional terms, conditions, or requirements on 'testing the waters' communications for issuers that are not emerging growth companies. It also mandates that the SEC submit a report to Congress detailing its findings supporting any such rulemaking prior to its implementation.
Section 2(2) amending Securities Act of 1933, Section 6(e)
Expansion of Confidential Draft Registration Statement Submissions
This provision significantly expands the ability for companies to submit draft registration statements confidentially to the SEC for nonpublic review. It allows any issuer, prior to its initial public offering (IPO) date, to do so. Additionally, it extends this privilege to any issuer within one year after its IPO or its registration of a security under Section 12(b) of the Securities Exchange Act of 1934. The initial confidential submission and all amendments must be publicly filed at least 15 days before a road show or the requested effective date.
Section 2(2)(C) adding Securities Act of 1933, Section 6(e)(3)
SEC Authority for Additional Requirements on Confidential Submissions
This provision grants the Securities and Exchange Commission (SEC) the authority to issue new regulations, following public notice and comment, to impose additional terms, conditions, or requirements on confidential draft registration statements for issuers that are not emerging growth companies. Similar to the 'testing the waters' provision, it requires the SEC to submit a report to Congress detailing its findings supporting any such rulemaking prior to its implementation.