On October 15, 2026, the SEC’s Division of Corporation Finance issued new and revised Corporation Finance Interpretations addressing Form S-8 and Rule 701 questions for compensatory equity awards. The guidance provides companies with greater flexibility in several areas, including the registration of pre-IPO awards, the timing of Form S-8 registration for restricted stock and restricted stock units (RSUs), the treatment of forfeited awards, and equity awards assumed in M&A transactions. The guidance is available in the SEC’s October 15, 2026 Corporation Finance Interpretations Update.
The key developments are summarized below.
1. Pre-IPO Equity Awards
New CFI 271.28 confirms that, after becoming an Exchange Act reporting company and eligible to use Form S-8, an issuer may use Form S-8 to register shares to be issued upon vesting of restricted stock awards and shares underlying outstanding stock options and RSUs previously granted to eligible recipients in reliance on an exemption from Securities Act registration. Existing guidance already supported the use of Form S-8 to register shares underlying outstanding pre-IPO stock options before exercise. The new interpretation helpfully confirms that Form S-8 is also available for outstanding full-value awards, such as restricted stock and RSUs.
This can provide an important practical benefit to award holders. Shares issued pursuant to Form S-8 generally are not restricted securities and therefore may be sold in the public market without the resale restrictions applicable to shares issued in an exempt offering, subject to applicable limitations for affiliates (as well as insider trading policies, contractual lockups, and any other applicable sale restrictions). This may be particularly helpful where participants wish to sell shares following settlement of awards that vest in connection with an IPO, including to fund applicable tax withholding obligations.
2. More Flexibility on Form S-8 Timing for RSUs and Restricted Stock
New CFI 126.47 addresses when the offer and sale of shares associated with restricted stock and RSUs must be registered. The SEC staff will not object if an issuer registers the offer and sale on Form S-8 by the date of vesting, rather than the date of grant, provided the issuer was eligible to use Form S-8 on the grant date.
This provides useful flexibility when an issuer does not have sufficient shares covered by an existing Form S-8 for a proposed grant, for example in the case of an inducement or transaction-related grant that is being made outside of the share reserve under the issuer’s shareholder-approved equity plan. Instead of filing an additional Form S-8 before making the grant, an eligible issuer may be able to complete the registration before the award vests. The guidance does not address whether an issuer may treat RSUs that vest upon meeting retirement eligibility criteria as unvested for Form S-8 purposes when the participant has already satisfied the applicable criteria. As a conservative approach, we caution against relying on the new guidance to delay registration on Form S-8 in these circumstances.
The guidance also means that shares associated with restricted stock or RSUs that are forfeited before vesting need not have been registered solely because the awards were previously granted. Companies relying on this flexibility will nevertheless need controls to ensure that sufficient shares are registered before vesting, including in situations where vesting may be accelerated and therefore occur earlier than originally anticipated.
3. Treatment of Forfeited Awards
New CFI 126.46 separately addresses awards subject to vesting, such as RSUs, for which the underlying shares have already been registered on Form S-8 and the associated registration fees have been paid.
If the awards are forfeited before vesting and the underlying shares become available for reissuance under the plan, the SEC staff will not object if the issuer applies the filing fees associated with those shares to future Form S-8 registrations, including registrations covering shares that became available for reissuance under the plan following the forfeiture. Although the guidance is silent on this point, we would not expect the same treatment to apply to shares withheld to satisfy tax withholding obligations.
This avoids duplicative registration fees where shares underlying forfeited awards return to the plan reserve and are subsequently registered for issuance under new awards.
Importantly, CFI 126.46 confirms both that the shares may become available for reissuance under the plan, where the plan so provides, and that the filing fees previously paid with respect to those shares may be applied to a future Form S-8 registration. It does not expressly address whether shares returned to the plan reserve remain available for issuance under the existing Form S-8 registration statement. Even so, taking this guidance together with CFI 126.47, it appears reasonable to conclude that registered shares tied to awards forfeited before vesting were never drawn down against the original registration statement.
4. Assumed Awards in M&A Transactions
The new guidance also addresses compensatory awards held by former employees of an acquired company.
Revised CFI 126.14 confirms that a public company acquiror may use Form S-8 to register its shares associated with compensatory awards assumed (or substituted) in an acquisition, including stock options, restricted stock, and RSUs held by former employees of the target. The revised interpretation reverses prior guidance that prevented the use of Form S-8 for assumed/substituted awards held by former target employees.
New CFI 271.29 provides corresponding flexibility under Rule 701 for an eligible private company acquiror that assumes target company awards held by former target employees.
These interpretations give buyers greater flexibility in determining how to treat outstanding awards held by former target employees and compensatory awards held by other former service providers. Depending on the terms of the transaction and the awards, a buyer may be able to assume and preserve these awards, rather than cashing them out or needing to rely on an alternative Securities Act registration such as Form S-4 or Form S-3, solely because the holder’s service with the target ended before closing.
Takeaways
1. Treat legacy awards as part of the IPO registration workstream. Companies preparing for an IPO should inventory outstanding restricted stock, options, and RSUs granted in reliance on Securities Act exemptions and determine which shares should be included in the initial Form S-8.
2. Use the RSA/RSU vesting date flexibility selectively. Delaying Form S-8 registration until vesting of restricted stock and RSUs may be particularly helpful for inducement and transaction-related grants where existing Form S-8 capacity is insufficient. Companies that do delay should have controls that capture not only scheduled vesting dates but also events that can accelerate vesting, such as satisfying retirement eligibility criteria or the occurrence of a change in control or qualifying termination, so that the necessary Form S-8 is effective before vesting occurs.
3. Assess registration coverage and fee credits for recycled shares. Companies should evaluate whether shares underlying forfeited RSUs and restricted stock awards that are recycled into an equity plan share pool remain available for issuance under their existing Form S-8. If a new Form S-8 is filed, they should note that registration fees previously paid for those shares can now be applied to the new filing.
4. Revisit the treatment of former employees in M&A equity workstreams. Buyers should reconsider their approach to awards held by former target employees as they consider whether to assume or cash out those awards. The holder’s departure before closing no longer requires a separate registration or exemption approach, giving buyers greater flexibility to preserve these awards on the same basis as other assumed awards. The guidance therefore eases a securities law constraint that may previously have influenced this early deal decision.
For specific advice on how the new CFIs may affect your equity compensation program, Form S-8 registration practices, or treatment of equity awards in a corporate transaction, please contact your Baker McKenzie relationship partner or any member of our Compensation team.
