The bill amends the Securities Act of 1933 to let any issuer—not just emerging growth companies—use "testing the waters" communications and confidential draft registration submissions for IPOs, Exchange Act Section 12(b) listings, and follow-on offerings. It also directs the Securities and Exchange Commission (SEC) to be able to impose additional terms via notice-and-comment rulemaking, but requires the SEC to send Congress a report of the findings supporting any such rulemaking before it begins.
Why this matters: the changes lower a procedural barrier for companies considering public offerings by expanding private pre-filing engagement with investors and SEC staff. That can shorten timetables and reduce transaction risk for issuers, while shifting disclosure timing and compliance burdens for underwriters, lawyers, and the SEC staff — and raising questions about market transparency and regulatory workload.
At a Glance
What It Does
The bill revises 15 U.S.C. 77e(d) and 77f(e) so that any issuer may engage in oral or written "testing the waters" communications and may submit draft registration statements to the SEC for confidential, nonpublic staff review prior to public filing. It preserves the SEC's authority to adopt additional conditions through rulemaking, conditioned on a pre-rulemaking report to Congress.
Who It Affects
Public and pre‑public companies pursuing IPOs, companies planning an initial Exchange Act Section 12(b) listing, and issuers doing follow-on offerings are directly affected. Other stakeholders include underwriters, securities counsel, investor relations teams, and SEC review staff who handle confidential submissions and communications.
Why It Matters
Permitting broader use of these pre-filing tools changes how deals are prepared: issuers can test demand and get staff feedback without immediate public disclosure, potentially lowering the cost and risk of going public. At the same time it creates timing and transparency trade-offs that will shape underwriting, disclosure controls, and SEC resourcing.
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What This Bill Actually Does
The bill makes two parallel expansions to longstanding market‑access procedures. First, it removes the phrase limiting "testing the waters" communications to emerging growth companies and replaces it with a rule that covers any issuer.
That change means any company planning an offering can communicate privately with prospective investors—both orally and in writing—about a potential securities offering before filing a registration statement, subject to whatever conditions the SEC may later impose by notice-and-comment rulemaking. The statute explicitly preserves the SEC’s ability to set additional terms for non‑emerging growth issuers, and requires the agency to send Congress a report identifying the factual basis for any such rulemaking before it begins.
Second, the bill rewrites the confidential submission provision for draft registration statements so that any issuer can submit draft forms to the SEC staff for nonpublic review before publicly filing. The private review can occur for initial public offerings, initial Exchange Act Section 12(b) registrations, and follow-on offerings.
The bill sets firm backstop deadlines for when those confidential drafts and any amendments must be publicly filed with the Commission—varying by offering type—and, as with testing the waters, authorizes the SEC to adopt further conditions after issuing a report to Congress.Practically, these changes allow companies to iterate with SEC staff and to gauge investor demand without triggering public disclosure earlier in the deal process. That likely shortens effective market exposure for sensitive information and can reduce the risk that a public filing sinks a transaction.
The statutory deadlines for converting confidential drafts into public filings limit how much review can stay out of the public record, but they also compress the window between public filing and effectiveness for some offerings. Finally, by attaching a pre‑rulemaking reporting obligation to the SEC’s authority to impose additional conditions, the statute builds in a congressional information check but does not prevent the Commission from tailoring detailed regulatory requirements through the standard rulemaking process.
The Five Things You Need to Know
The bill replaces the statutory limitation on "testing the waters" from "emerging growth company" to "issuer," making private pre‑filing investor communications available to all issuers.
Any issuer may confidentially submit a draft registration statement to the SEC for nonpublic staff review for IPOs, initial 12(b) registrations, and follow-on offerings.
Public filing deadlines for confidential submissions are statutory backstops: for IPOs and initial 12(b) registrations the draft must be publicly filed no later than 10 days before effectiveness or listing; for follow-on offerings the draft must be publicly filed at least 48 hours before effectiveness.
The SEC may adopt additional terms or conditions for non‑emerging growth issuers through notice-and-comment rulemaking, but must first provide Congress a report listing the findings that support the proposed rulemaking.
Section 6(e)’s heading is rewritten to emphasize broad confidential review of draft registration statements rather than limiting that process to emerging growth companies—an explicit statutory expansion of the tool.
Section-by-Section Breakdown
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Short title
Establishes the act's short title as the "Encouraging Public Offerings Act of 2025." This is a purely identificatory provision but signals the statute’s policy focus on facilitating public offerings.
Expands 'testing the waters' to all issuers and authorizes SEC rulemaking
This amendment changes the statutory text that previously limited pre‑filing communications to emerging growth companies, substituting the broader term "issuer." It also adds a new subsection explicitly authorizing the SEC to adopt rules—with public notice and comment—imposing additional terms, conditions, or requirements on these communications when used by non‑emerging growth issuers. Critically, the SEC must submit to Congress a report containing the findings that will support any such rulemaking prior to initiating the rulemaking process. The practical effect is to open a long‑reserved tool to a wider set of companies while giving the SEC latitude to set guardrails after consulting the public and informing Congress.
Allows confidential draft registration submissions for any issuer and sets public‑filing deadlines
This change replaces the heading and text that limited confidential draft registration review to emerging growth companies. Any issuer may now confidentially submit draft registration statements for IPOs, initial Exchange Act 12(b) registrations, and follow‑on offerings for SEC staff nonpublic review. The statute sets explicit deadlines for public filing of the initial confidential submission and any amendments: 10 days before effectiveness for IPOs, 10 days before exchange listing for initial 12(b) registrations, and 48 hours before effectiveness for follow‑on offerings. The amendment also mirrors Section 5(d)’s delegation: the SEC can impose additional requirements by notice-and-comment rulemaking, but it must first give Congress a report explaining the factual basis for the rulemaking.
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Explore Finance in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Pre‑IPO and small public companies: They can privately gauge investor demand and obtain SEC staff feedback without immediate public disclosure, reducing deal risk and permitting more iterative preparation before exposure to the public markets.
- Underwriters and placement agents: Expanded 'testing the waters' allows underwriters to perform more robust market checks privately, improving pricing and allocation strategies before a public filing.
- Securities lawyers and compliance teams: The confidential review process can reduce drafting iterations after public filing and lower the risk of early public disclosure errors, creating consulting opportunities and clearer pre‑filing workflows.
Who Bears the Cost
- Public investors (and potential retail participants): Broader private pre‑filing communications can increase the period where some market participants have access to issuer information while the public record remains silent, raising fairness and information asymmetry concerns.
- SEC staff and the agency budget: The SEC will face increased confidential review workload and likely more frequent, complex filings; rulemaking obligations and required reports to Congress add procedural burdens without new funding in the statute.
- Exchange platforms and market surveillance: Faster conversion from confidential review to public filing (especially the 48‑hour window for follow‑ons) compresses surveillance timeframes and may require exchanges and regulators to adapt monitoring processes.
Key Issues
The Core Tension
The central dilemma is between making it easier and less risky for companies to go public (promoting capital formation) and preserving the principles of timely, equal public disclosure that protect market fairness and investor confidence; the bill shifts power toward issuer flexibility while leaving open how and how fast regulators will rebalance that shift through rulemaking and oversight.
The bill deliberately expands tools that were previously restricted to emerging growth companies, but it stops short of specifying substantive guardrails beyond giving the SEC authority to craft them. That design creates implementation issues: the statutory public‑filing backstops (10 days and 48 hours) limit how long substantive review can remain nonpublic, yet they also create narrow windows in which markets encounter new material information.
Those compressed windows can produce volatility or force expedited compliance steps, particularly for follow‑on offerings where the public filing may come within two days of effectiveness.
Requiring the SEC to transmit a report to Congress "prior to any rulemaking" provides legislative visibility but does not constrain the content or timing of eventual rules. The report could slow SEC action or, conversely, be treated as a perfunctory step that leaves real policy determinations to the usual notice-and-comment process.
Finally, the expansion increases opportunities for selective access: companies could use private communications and confidential drafts to coordinate with favored investors or iterate disclosures in ways that advantage informed counterparties, raising enforcement and fairness questions that the statute does not resolve.
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