The U.S. Securities and Exchange Commission (SEC) is preparing a significant shift aimed to revive initial public offerings (IPO), particularly among small and emerging companies whose access to public markets has been increasingly hindered during the last decades.
Introduction
Over the past three decades, the number of publicly listed U.S. companies has fallen by nearly 40%(1). Much of this decline reflects the increasing cost and complexity of going public, which discourages small-cap firms from pursuing a public listing. As a result, founders of smaller companies often depend on private financing, leaving a relatively limited group of larger, more mature issuers to dominate the public markets. To reverse this trend, the SEC plans to realign its disclosure regime so that it reflects issuers’ size and investors’ needs, instead of imposing one-size-fitsall reporting obligations.
“Shortly after I left the SEC as a staff member in the mid-1990s, there were more than 7,000 companies listed on the U.S. exchanges, from small-cap innovators to giants of industry…
What happened during those decades tells a cautionary tale of regulatory creep…
This decline was not inevitable nor, is it now irreversible. While there are many SEC rules and practices that have amassed over the decades and are ripe for reform, perhaps none epitomize regulatory creep more so than the voluminous disclosure requirements contained in the Commission’s rulebook today.”
Chairman Paul Atkins
Reaffirming the Purpose of Disclosure
The Securities Act of 1933 was created to ensure that investors receive transparent and material information, allowing them to make fair and informed decisions. Over time, additional rules and bureaucratic requirements have made the process significantly more complex and expensive for companies. A framework originally built to promote transparency has, in practice, resulted in higher costs and operational challenges (particularly for smaller companies), making it increasingly difficult for them to access the public markets.
Scaling Disclosure to Company Size and Maturity
The SEC has not updated its disclosure thresholds since 2005. As a result, companies with a public float as low as $250 million remain subject to the same disclosure requirements as multi-billion-dollar issuers. This creates steep and often unequal costs for smaller companies, not only during the listing process but also through ongoing annual expenses, including legal fees, accounting work, and mandatory audits. Over time, filings and periodic reports have also become excessively long and dense, causing both issuers and investors to lose clarity. The consequence is a direct impact on the attractiveness of the U.S. capital markets, particularly for early-stage or smaller companies evaluating whether to pursue an IPO.
To address these issues, the SEC’s broader goal is to restore materiality as the foundation of disclosure and tailor requirements to company size and characteristics. SEC Chairman Atkins mentioned two measures to advance this effort:
- Tailor disclosure requirements for smaller companies so that obligations are proportionate to their size.
- Give companies at least two years to meet the full set of disclosure obligations (2).
As of today, emerging growth companies receive reduced reporting relief for only one year after going public. Extending this to a two-year period would provide newly listed issuers more time to strengthen internal controls and compliance systems, lowering the pressure and cost of the immediate post-IPO phase.
The disclosure reform is just one of three pillars of SEC’s plan to make IPOs great again. A second pillar involves de-politicizing shareholder meetings and returning their focus to voting on director elections and material corporate matters. Finally, the SEC also plans to reform the litigation landscape for securities lawsuits to eliminate frivolous complaints, while maintaining an avenue for shareholders to continue to bring forth meritorious claims.
IPO On-Ramp
The proposed review aims to recalibrate the standards that govern public market access by simplifying disclosure requirements for small issuers. Going public remains one of the most powerful launchpads for companies, offering access to capital, greater transparency through governance and financial reporting, and broader growth opportunities. Reviving IPO activity requires rebuilding the regulatory framework around its original mission, which is to protect investors through clear, material information while enabling companies to raise capital efficiently. If successful, the SEC’s efforts could further boost momentum in the U.S. IPO market by enhancing access for companies and maximizing values for investors.
ARC Group: Advising Companies Through the Evolving IPO Landscape
ARC Group works with emerging growth companies, many of which face challenges accessing growth capital to finance their expansion strategy. The announced shift in regulations could act as a catalyst, making it easier for clients to access the U.S. public capital markets, the deepest pool of capital globally. ARC Group offers end-to-end capital markets advisory services across regions, providing practical guidance on disclosure obligations, structuring alternatives, and investor readiness. Our mission is to help issuers of all sizes navigate evolving regulatory expectations and create efficient pathways to listing and sufficient access to capital.
Author:
Filippo Fontana
Analyst
References:
(1) Atkins, P. (2025). Revitalizing America’s Markets — 250 Years and Counting. U.S. Securities and Exchange Commission. Available: SEC.gov | Revitalizing America’s Markets at 250
(2) Beyoud, L. (2025). SEC head wants to ease rules for small-firm public offerings. Available: SEC chief wants to boost IPOs by easing rules for small firms
Barron’s. (2025). IPO stock-market dynamics signal a new era for small public offerings. Available: Recent Stock Market Debuts Have Fizzled. What to Expect from IPOs in 2026. – Barron’s
Ortolani, A. (2025). SIFMA encouraged by SEC plan to ease path for small-company IPOs. Available: SIFMA Backs SEC Plan To Ease Small Company IPOs
