On October 15, the staff of the SEC’s Division of Corporation Finance issued six new and two revised Corporation Finance Interpretations (CFIs) addressing rules and forms under the Securities Act of 1933, as amended (Securities Act), and Section 16 reporting under the Securities Exchange Act of 1934, as amended (Exchange Act). The CFIs address several recurring questions for companies preparing to go public, structuring acquisitions, and administering equity compensation programs.
PRE-IPO COMPENSATORY AWARDS MAY BE MOVED ONTO FORM S-8
Form S-8 is a “short form” SEC registration statement that eligible reporting companies may use to register the offer and sale of securities to employees, directors, and other eligible service providers under employee benefit and equity compensation plans.
New Securities Act Rules CFI 271.28 confirms that a company may move an outstanding compensatory offering originally conducted in reliance on a Securities Act registration exemption (e.g., Rule 701) available to the company as a private company onto Form S-8 once the company becomes an Exchange Act reporting company that is eligible to use Form S-8.
The CFI covers shares to be issued upon vesting of restricted stock awards and shares underlying outstanding stock options and restricted stock units (RSUs) previously granted to eligible recipients. While located within the Rule 701 interpretations, the CFI refers to reliance on a Securities Act exemption generally, rather than exclusively to Rule 701.
CFI 271.28 provides express SEC staff support for bringing eligible legacy awards into a company’s registered equity compensation program following an IPO. Companies preparing their initial Form S-8 should therefore review outstanding pre-IPO awards, rather than focus solely on awards to be granted under their newly adopted public company equity compensation plans.
The relief remains conditioned on Form S-8 eligibility and addresses the remaining offering under outstanding awards. Companies should separately assess the treatment of shares already issued before becoming public and should not view the interpretation as resolving any compliance deficiencies associated with the original exempt grants.
RELIEF FOR ASSUMED AWARDS HELD BY FORMER EMPLOYEES OF ACQUISITION TARGET
Two related interpretations expand flexibility for equity compensatory awards held by individuals whose employment or service relationship with an acquisition target has ended (as opposed to only current employees).
- Public-Company Acquirers. Revised Securities Act Forms CFI 126.14 confirms that an eligible acquirer may register on Form S-8 the offer and sale of the securities associated with compensatory awards assumed in an acquisition and held by former target employees. The interpretation expressly addresses stock options, restricted stock, and RSUs. Accordingly, an award holder’s status as a former target employee does not, by itself, prevent Form S-8 registration of the securities associated with an assumed award.
- Eligible Private-Company Acquirers. New Securities Act Rules CFI 271.29 provides parallel relief under Rule 701. An acquirer eligible to rely on Rule 701 may use the exemption for restricted stock and securities underlying options and RSUs held by formerly eligible target employees or service providers whose employment or service relationship terminated before the acquisition, provided the awards are assumed in the transaction.
These interpretations may make assumption a more practical alternative to cashing out awards held by former target personnel. Importantly, the CFIs relate to the assumption of existing equity compensatory awards, not a general authorization to make new grants to former target personnel. The acquirer must still satisfy the applicable eligibility requirements, including relevant Form S-8 and Rule 701 conditions.
Practice Tip
Transaction teams should identify these awards during diligence and address the applicable registration or exemption approach alongside the transaction’s award treatment provisions.
REGISTRATION OF CERTAIN RESTRICTED STOCK AND RSU OFFERINGS MAY BE TIED TO VESTING
New Securities Act Forms CFI 126.47 permits an Exchange Act reporting company to delay filing a Form S-8 to register the offer and sale by the company of shares issuable under restricted stock or RSU awards on Form S-8 until the vesting date, rather than the grant date, as long as the company was eligible to use Form S-8 when the awards were granted.
This approach aligns the treatment of restricted stock and RSUs with longstanding staff guidance relating to the treatment of stock options. Under existing (and unchanged) Securities Act Forms CFI 126.02, shares underlying options may be registered on Form S-8 at any time before exercise, regardless of when the options became exercisable.
Practice Tip
Companies should keep the following practice points in mind:
- The distinction between vesting and settlement, as registration would need to occur by the vesting date, not by a later settlement or share delivery date;
- The need to monitor scheduled vesting dates and any provisions that could accelerate vesting, such as a retirement vesting provision, including transaction-related acceleration; and
- The eligibility requirements of Form S-8, which would need to have been met at the time of grant, as well as the time of filing.
RECYCLING FILING FEES ASSOCIATED WITH FORFEITED RSUS
New Securities Act Forms CFI 126.46 addresses awards for which a company previously registered the offer and sale of underlying securities on Form S-8 and paid the associated filing fees, but for which the RSUs never vested and were forfeited. Where the underlying securities become available for reissuance under the plan, the SEC staff will not object to applying the associated filing fees to future Form S-8 registrations of offers and sales of securities underlying RSUs, including securities returned to the equity plan’s share reserve.
The relief creates an opportunity to reduce duplicative filing fees associated with forfeited awards. As discussed in our recent webinar on Form S-8 share counting, it also underscores the need to carefully review and monitor how equity plan administrators reconcile forfeitures, available plan shares, securities registered on Form S-8, and previously paid fees.
Practice Tip
This interpretation is limited to relief relating to the reuse of filing fees for future registrations. It does not obviate the need to carefully analyze registered share capacity on Form S-8 (i.e., whether forfeited shares returning to a plan requires the filing of an additional Form S-8). Companies should evaluate equity plan authorized share availability, registration coverage, and available fee credits separately and confirm the appropriate filing mechanics before relying on the relief.
CLARIFICATION OF DEFINED CONTRIBUTION PLAN REGISTRATION FEES
New Securities Act Rules CFI 240.19 confirms that a company may use Rule 457(o) to calculate registration fees for securities offered under a defined contribution plan. Rule 457(o) permits registration on an aggregate-dollar-amount basis, providing an alternative to registering a specified number of shares.
Revised Securities Act Forms CFI 126.19 clarifies filing fees related to a 401(k) plan that offers employer securities as an investment option, as follows:
- Companies that offer an automatic employer match would not need to pay a filing fee with respect to such securities; and
- Companies must pay filing fees for employee contributions and employer matching contributions to the extent such contributions are invested in employer securities.
Additionally, consistent with prior guidance, an indeterminate amount of plan interests must also be registered in the circumstances described in this interpretation; however, no separate fee is payable for such interests under Rules 416(c) and 457(h)(2).
Practice Tip
Companies should consider whether their registration fee calculations appropriately distinguish among contribution types and reflect any portion invested in employer securities.
FORM 4 DEADLINES FOR FOREIGN EXCHANGE TRANSACTIONS
New Section 16 Rules and Forms CFI 135.05 clarify that the two-business-day Form 4 filing period is calculated using the transaction date in the time zone in which the transaction was executed. The filing cutoff on the resulting due date remains the applicable EDGAR deadline measured in US Eastern Time.
In the SEC staff’s example, if a transaction occurs on a foreign exchange at 9:00 am local time on August 25, 2026 (when it is still August 24 in US Eastern Time), the Form 4 is due by 10:00 pm US Eastern Time on August 27, 2026.
Practice Tip
Companies supporting insiders who trade on foreign exchanges should ensure that their reporting procedures capture the local execution date and time zone rather than automatically using the corresponding US Eastern Time calendar date to calculate the deadline.
PRACTICAL CONSIDERATIONS
The CFIs reflect informal staff positions, not amendments to SEC rules or binding SEC determinations. Companies should evaluate the particular facts and conditions of each interpretation before changing their registration, exemption, or reporting practices.
