SEC Issues Proposal to Update Regulation of Transfer Agents

On September 1, the SEC announced a proposal to update the rules and forms that apply to registered transfer agents. The proposal would, among other things: 

• Modernize the rules to reflect how transfer agents carry out their activities in light of technological advancements, including the use of electronic and blockchain-based recordkeeping and uncertificated securities.
• Establish new requirements related to turnaround, risk management, and inactive securityholders.
• Introduce two new rules addressing compliance and restrictive legends for registered transfer agents. More specifically:
  • Registered transfer agents would be required to establish, maintain, and enforce written policies and procedures reasonably designed to achieve compliance with the federal securities laws and rules applicable to transfer agents; and
  • New rules would establish requirements for the placement and removal of restrictive legends from securities and would require registered transfer agents to refrain from facilitating unregistered securities transactions unless they have a reasonable basis to believe that a transaction does not violate, or is not part of a chain of transactions that would violate, Section 5(a) of the Securities Act of 1933.
• Amend the registration and annual reporting requirements for transfer agents.

According to the Fact Sheet accompanying the press release, the Commission first adopted the majority of the federal transfer agent rules in the late 1970s and early 1980s, and the rules have not been substantively updated since that time.

The proposal is subject to a public comment period that will be open for 60 days after the date of publication of the proposed rules in the Federal Register.

At the end of August 2026, the SEC submitted four significant rulemaking projects to the Office of Information and Regulatory Affairs (OIRA) that could impact public companies and capital raising. OIRA updated its dashboard to indicate that these proposed rulemakings are now subject to OIRA review. The four proposals are:

• Executive Compensation Disclosure Reform;
• Rescission of Rule 14a-8’s Federal Regulation of Shareholder Proposals and Amendments to Rule 14a-4;
• Proxy Solicitation Modernization; and
• Enhancing Retail Exposure to Private Markets.

While OIRA has up to 90 days to review an agency’s rulemaking, it has typically reviewed most SEC proposals within a much shorter period of time. Once OIRA has completed its review, the Commission will vote on the rulemaking and, if approved, a proposing release will be published on the SEC’s website and in the Federal Register.

On August 31, the Food and Drug Administration (FDA) and the SEC announced a memorandum of understanding (MOU) that formalizes and streamlines existing interagency cooperation practices by establishing a written framework for sharing information about FDA-regulated products, companies, and individuals. The MOU is intended to support both agencies’ regulatory and enforcement responsibilities, including the SEC’s review of public company filings and related investigations and resulting enforcement actions. It applies to interagency requests made after August 31 and remains in effect for three years. The MOU confirms that the SEC may use nonpublic FDA information in public company filing reviews (e.g., registration statements and Forms 10-K) and in enforcement investigations and resulting enforcement actions. Including the Division of Corporation Finance is significant: FDA information may influence the Division’s review of disclosure prior to, or apart from, an SEC enforcement investigation, and an issue identified in the course of reviewing a company’s disclosure could lead to an enforcement referral. Our client alert on this topic provides more details regarding this development.

On September 2, the staff of the Securities and Exchange Commission’s Division of Corporation Finance (the Staff) issued three new Exchange Act Sections 13(d) and 13(g) and Regulation 13D-G Beneficial Ownership Reporting Corporation Finance Interpretations (CFIs) addressing when shareholder engagement will not, standing alone, cause an investor to lose its eligibility to report beneficial ownership on Schedule 13G. The new guidance follows last year’s Question 103.12, which stated that shareholders relying on Rule 13d-1(b) or Rule 13d-1(c) must consider all relevant facts and circumstances in determining whether an engagement reflects a purpose or effect of changing or influencing control. It also distinguished between a shareholder simply expressing its views and pressuring management to take specific action, such as by conditioning support for director nominees on changes to the issuer’s governance, compensation, or other policies.

The new CFIs (Questions 103.13, 103.14 and 103.15) clarify, but do not replace, the framework set out in Question 103.12. The central issue remains whether a shareholder is exchanging information and expressing its views or is using its voting power or other leverage to press the issuer for a specific result. When planning and conducting an engagement, Schedule 13G filers should consider who initiated the contact, whether they intend to seek a specific action or link their voting support to a requested change, and whether communications with other shareholders or proxy solicitors could involve coordination that raises separate legal issues.

On September 4, the Staff released five new CFIs — one under Securities Act Rules and four under Securities Act Forms.

The Staff indicated in Securities Act Rules Question 240.18 that a filer may not claim an offset of fees paid on a preliminary merger Schedule 14C to its registration of the offer and sale of securities on a Securities Act registration statement. An offset is not available because the PREM14C was filed in connection with a different transaction.

In Securities Act Forms Questions 113.09-12, the Staff addressed a number of incorporation by reference scenarios:

Question 113.09

Question: A company was not eligible to incorporate by reference when it filed a registration statement on Form S-1 and did not utilize historical or forward incorporation by reference. Can the company subsequently utilize incorporation by reference in its next pre- or post-effective amendment if, at the time it files the amendment, it meets all conditions for use of incorporation by reference?

Answer: Yes. The Staff believes that a registrant that becomes eligible to use historical or forward incorporation by reference may do so at any time by filing a pre- or post-effective amendment, as applicable, by analogy to Securities Act Rule 401(c) which permits use of a shorter form registration statement at the time of any amendment to a registration statement. The pre- or post-effective amendment to add incorporation by reference must include the information required by Item 12 of Form S-1. 

Question 113.10

Question: If a smaller reporting company complies with Item 12(b) of Form S-1 by indicating that it has elected to forward incorporate on Form S-1, must it meet all of the eligibility requirements and conditions to using incorporation by reference set forth in General Instruction VII of Form S-1 in order for the documents subsequently filed by the registrant to be incorporated into the registration statement?

Answer: Yes. See Release No. 33-10003 (Jan. 13, 2016).

Question 113.11

Question: If a company that is eligible to forward incorporate by reference on Form S-1 has elected to forward incorporate information filed after the effective date of the registration statement under Item 12(b), must it also incorporate by reference into the prospectus contained in the registration statement the documents required to be specifically incorporated by Items 12(a)(1) and 12(a)(2) of Form S-1?

Answer: Yes. See Release No. 33-10003 (Jan. 13, 2016).

Question 113.12

Question: A prospectus in a Form S-1 registration statement, unlike Form S-3, does not require incorporation of any other document by reference. If a registrant eligible to forward incorporate by reference elects to do so, does forward incorporation of subsequent Exchange Act filings always provide all of the itemized disclosure required in a prospectus in a Form S-1?

Answer: No. In order to determine whether a registrant has a complete prospectus at the time of any sale, a registrant that has elected to forward incorporate by reference must consider whether any item of Form S-1 requires disclosure not included in any Exchange Act filings subsequently filed by the registrant that the Form S-1 has incorporated by reference. To the extent such registrant needs to add such disclosure to its prospectus, it will need to evaluate whether to file a post-effective amendment to the registration statement or prospectus supplement. However, if the information required by Form S-1 appears in incorporated documents under headings that differ from the Form S-1 item headings, incorporation by reference still satisfies the form’s requirements.

On September 3, the SEC instituted a settled cease and desist proceeding against the chief financial officer of a public company alleging that the individual directed the filing of the company’s Form 10-K despite knowing that the company’s independent auditors had not completed their audit work. The Commission found violations of the reporting and certification provisions of the federal securities laws and ordered the individual pay a $30,000 civil fine. Consistent with current practice, the individual did not admit the findings contained in the Commission order.

According to the Commission order, approximately a week before the Form 10-K filing deadline, the company’s auditor disclosed at a meeting of the Audit Committee of the Board of Directors, attended by the CFO, that certain open items remained with respect to the firm’s audit of the company’s financial statements for the recently ended fiscal year. These open items included (i) audit work regarding the accounting for a financial guarantee concerning certain products; (ii) review and sign-off on work papers by the engagement quality review partner; and (iii) approval for release of the Form 10-K. On the filing deadline date, a partner at the company’s prior auditor indicated that it was not signed off; neither the current nor the former auditor provided final approval to include their audit opinions and consents on that date. Nonetheless, the CFO directed a subordinate to proceed with filing the Form 10-K, which effectively misrepresented that the audit had been completed and included draft audit opinions and consents as if they were final approved versions. The auditors informed the Chair of the company’s Audit Committee of the unauthorized filing. The next day, the company filed a Current Report on Form 8-K disclosing the improper filing. The CFO later resigned.