Last month, John observed that “DExit” hasn’t been a stampede by any stretch, based on the (limited) number of reincorporation proposals and high percentage of Delaware-incorporated IPOs that occurred in 2024 and 2025.
A recently published dataset for entity formations, gathered by Professor Andrew Verstein at the UCLA School of Law, takes that one step further – Delaware experienced a “sharp increase” in incorporations in 2025, on an absolute basis as well as relative to other states. Here’s more detail from this HLS blog:
The Corporate Census is a draft paper and accompanying dataset that tracks entity formation in the United States. It presents a near-complete dataset of entity formations — including corporations, LLCs, and other business forms — for all U.S. states, dating back to the nation’s founding. It allows entity-by-entity, week-by-week, analyses and comparisons across states. The database includes about 100 million formations and allows for granular, longitudinal analysis of state popularity, entity-type trends, and legal or economic shocks.
And:
About 30% more Delaware corporations formed in 2025 than in 2024, greatly exceeding the prior trendline. This, while national incorporation levels remained flat.
This was an absolute increase, not driven by a decline in formation in other states. While Delaware averaged 1090 new corporations per week in 2020-24, that number increased by 309 in 2025. The rest of the nation as a whole enjoyed no statistically significant increase in corporate formation, nor did any other state individually. Plainly, something happened in 2024 or was anticipated for 2025 that rendered Delaware more attractive as a site of formation in 2025.
I was on the edge of my seat after reading that line, but the paper doesn’t arrive at any firm conclusion about what may have driven Delaware’s popularity last year, and we also can’t predict for sure whether the trend will continue. Nevertheless, it’s helpful to have numbers, instead of just “vibes,” about where Delaware stands.
We’ve known for a while that companies have been staying private longer and raising lots of capital along the way. The recent report from the SEC’s Office of the Advocate for Small Business Capital Formation confirmed that once again. The Staff found:
– The number of comapnies remaining private eight years or more after receiving their first VC round had quadrupled from 2014 to 2024, and
– 45% of unicorns are 9+ years old.
But hope springs eternal, and 2026 may be the year when more of them (finally, hopefully) move forward with a public debut.
These mega deals bring a different dynamic to the table when it comes to structuring the IPO and everything that goes into it. For example, this article from The Information gives a reminder that “innovative” lockups are on the table. Here’s an excerpt:
At least two large banks largely ruled out a standard IPO lockup period of either 90 to 180 days and are discussing how to design a staggered lockup release for the companies.
. . .
One option is staggering the dates to prevent a wave of selling on one day. IPO bankers and lawyers said investors could be allowed to sell a portion of their holdings every 20 to 30 days. Releases can also be triggered when the stock hits a certain price, they said.
The article notes that some companies that are believed to be in the pipeline have raised tens of billions of dollars privately. So, banks are looking to mitigate the risk of a mass selloff while also giving key insiders a path to liquidity.
Lockup variations aren’t unprecedented. Overall, underwriters have gotten more comfortable with early release mechanisms and see them as a tool to help with public float – e.g., early release based on stock price performance (as noted above), accommodating a release if the lockup is set to expire during a quarterly blackout period, or both. But there are still sensitivities, especially close to the IPO. Keep in mind that immediate sales might have collateral impacts on Section 11 liability as well – which is something I blogged about a few years ago in the lockup context. Meredith gave an update last summer on where this theory stands.
In this 21-minute episode of the Women Governance Trailblazers podcast, Courtney Kamlet and I spoke with Wei Chen – who serves as Chief Legal Officer and Executive Vice President of Government Affairs at Infoblox, and also founded The Atticus Project. We discussed:
1. Key leadership lessons that have shaped Wei’s approach to governance and compliance across different corporate cultures.
2. Wei’s vision for The Atticus Project to use AI tools to transform contract review and M&A diligence in corporate legal environments.
3. Practices boards can adopt to oversee technology risks and opportunities — including how to prepare for evolving regulations and use cases.
4. How governance professionals can credibly add value to corporate AI practices, in order to encourage responsible use of AI while also harnessing opportunities.
5. Wei’s vision for how AI will reshape corporate governance and the role of legal advisors in the next 5-10 years, and Wei’s advice for the next generation of women governance trailblazers.
To listen to any of our prior episodes of Women Governance Trailblazers, visit the podcast page on TheCorporateCounsel.net or use your favorite podcast app. If there are governance trailblazers whose career paths and perspectives you’d like to hear more about, Courtney and I always appreciate recommendations! Drop me an email at liz@thecorporatecounsel.net.
As of the time of this blog, it’s looking pretty likely that our government will shut down this weekend. I’m not sure whether to call it “good news” that we still have muscle memory from the last time around – but if nothing else, those recent experiences help us know what to expect. As a refresher:
– Ahead of the shutdown, we typically see the SEC post an operations plan and the Corp Fin Staff post pre-shutdown guidance – the August/September 2025 documents are here and here, respectively. The catch is that the Staff has to wait for the green light from elsewhere in the government to be able to post the guidance – and with the last go-round, that came very late in the game.
– Last time, the Corp Fin Staff provided a helpful update mid-shutdown, which we expect to carry forward, and I won’t be too surprised if the guidance also addresses some other pain points that were under discussion last fall.
– The exchanges are likely to step into more of a gatekeeping role.
– The Staff is still working through a large backlog of registration statement reviews, which is affecting turnaround times. Those will continue to pile up if the Staff gets furloughed again. A shutdown may also affect rulemaking priorities.
– Thankfully, this year’s Rule 14a-8 process means that the shutdown won’t derail proxy season. In the past, a proxy season shutdown would not only exacerbate the backlog that the staff would need to address upon their return, but everyone would be waiting for no-action letters and wringing their hands over how to proceed.
– We have a handful of helpful post-shutdown insights into how things will work when the government eventually reopens, which clients will surely be asking about and will help you with your game plan.
Every shutdown is unique, so we can’t be certain that everything will be handled the same way as it was last fall. But at least we know the general playbook and what to watch for. Stay tuned.
As I wrote on Monday, the Corp Fin Staff issued a CDI last week that prohibits voluntary exempt solicitations. But how is that going to be policed? This Gibson Dunn blog points out a possible hook:
The revised interpretation does not directly address how the revised position will be monitored and enforced, but we note that Rule 15 of Regulation S-T provides the SEC with the authority to remove a submission from EDGAR if, among other things, the agency has reason to believe the submission is misleading or unauthorized.
Notably, the new interpretation does not prevent shareholder proponents and others from conducting exempt solicitations through platforms other than EDGAR. However, whether or not filed on EDGAR, exempt solicitations remain subject to the anti-fraud provision of Rule 14a-9, which makes it unlawful for any soliciting materials to contain false or misleading statements or omissions of a material fact, and the conditions set forth in Rule 14a-2(b)(1)(vi), under which the exemption from having to file a proxy statement is not available to “[a]ny person who, because of a substantial interest in the subject matter of the solicitation, is likely to receive a benefit from a successful solicitation that would not be shared pro rata by all other holders of the same class of securities.”
At this point, I think it’s a little murky what will happen if anyone tests the boundaries of the CDI. A stern finger-wagging, or something more? Even if the Staff would plan to pull down filings, there may not be anyone around to do that if the government shuts down. What we do know is that anti-fraud liability continues to apply. And in practice, companies should monitor their own EDGAR pages and alert the Staff if they see a problematic filing – providing a copy of the notice and information showing that the shareholder doesn’t own more than $5 million of stock of the company.
At least the CDI has finally given ESG and anti-ESG proponents something to agree on, with Jim McRitchie and the National Legal and Policy Center both publishing similar grievances yesterday. The NLPC screed is, to put it politely, “interesting.” I’ll note Jim Moloney wasn’t looking very wolf-like when I saw him this week. Yes, I deliberately linked to the Gibson Dunn blog to tie this all together.
Yesterday morning, I wrote that it’s time to start paying attention to tokenization. Yesterday afternoon, the Staff of the Divisions of Corporation Finance, Investment Management, and Trading and Markets published a statement on that very topic, which outlines the different ways that securities can be tokenized and which securities laws apply to each situation. Parts of the statement look remarkably similar to my notes from SRI! Here’s an excerpt:
Tokenized securities generally fall into two categories: (1) securities tokenized by or on behalf of the issuers of such securities; and (2) securities tokenized by third parties unaffiliated with the issuers of such securities. This statement is intended to assist market participants as they seek to comply with the federal securities laws and prepare to submit any necessary registrations, proposals, or requests for appropriate action to the Commission or its staff. We stand ready to engage regarding any questions.
This section describes the distributed ledger concept that I was referring to in yesterday’s blog:
A single class of securities could be issued in multiple formats, including tokenized format. Similarly, an issuer may permit security holders to hold a security in different formats and convert the security from one format to another. The format in which a security is issued or the methods by which holders are recorded (e.g., onchain vs. offchain) does not affect application of the federal securities laws. For example, regardless of its format, the Securities Act requires that every offer and sale of a security must be registered with the Commission unless an exemption from registration is available. Similarly, stock is an “equity security” under the Securities Act and the Exchange Act regardless of its format.
On the other hand, the tokenized security could be of a different class of securities from those issued in traditional format. For example, an issuer could issue one class of common stock in traditional format and issue a separate class of common stock as a tokenized security. However, if the tokenized security is of substantially similar character as the security issued in traditional format and holders of the tokenized security enjoy substantially similar rights and privileges, the tokenized security may be considered of the same class as the security issued in traditional format for certain purposes under the federal securities laws.
In addition to underscoring coming attractions, I appreciate the effort of three divisions working together to issue a joint statement, which helps with seeing the big picture. And speaking of cooperation, SEC Chair Paul Atkins and CFTC Chair Michael Selig are holding a joint event at 2pm ET today to:
[D]iscuss harmonization between the two agencies and their efforts to deliver on President Trump’s promise to make the United States the crypto capital of the world.
The event will be open to the public and webcast live on the SEC’s website.
If there’s a common theme I’m hearing out here at the Northwestern Pritzker School of Law Securities Regulation Institute, it’s to “think big” about modernizing the public company experience. That includes the infrastructure for trading and voting. If you’ve been ignoring the digital revolution, now’s a good time to start paying attention.
There’s strong sentiment that blockchain will completely change the game – for example, we could see instantaneous trade settlement and peer-to-peer trading. It could also resolve longstanding “proxy plumbing” issues that make it hard to know who owns and votes stock – and make it much easier for retail investors to vote.
As one sign that things are moving along, the SEC posted notice yesterday for a revised version of a proposal that Nasdaq initially submitted back in September. Here’s an excerpt:
The Exchange proposes to amend the Exchange’s rules to enable the trading of securities on the Exchange in tokenized form during the pendency of a pilot program to be operated by the Depository Trust Company (“DTC”) pursuant to the terms of a December 11, 2025 Commission No-Action Letter. Specifically, proposed rules Equity 1, Section 1 and Equity 4, Rules 4756, 4757, and 4758 will clarify how Nasdaq trades tokenized securities under this pilot program. This Amendment No. 2 supersedes the original filing, as amended by Amendment No. 1, in its entirety.
And:
The purpose of the proposed rule change is to establish clearly that Nasdaq’s member firms and investors that are eligible to participate in the DTC tokenization pilot program (“DTC Eligible Participants”) may trade tokenized versions of those equity securities and exchange traded products (“ETPs”) on the Exchange that are eligible for tokenization as part of the DTC tokenization pilot program (“DTC Eligible Securities”), pursuant to the terms of the No Action Letter. The filing describes and applies to one method by which DTC Eligible Securities can trade on Nasdaq within the current national market system, using DTC to clear and settle trades in token form, per order handing instructions that DTC Eligible Participants may select upon entering their orders for DTC Eligible Securities on Nasdaq.
Meredith recently blogged about how the DTC pilot works. And it’s not just Nasdaq and DTC that are investing in tokenization – several other recent developments suggest it’s a priority for a number of big market players, and that companies are starting to jump in too:
At this point, tokenization isn’t just “for the kids” – securities lawyers will need to understand it too. Whether that’s the death knell for it being edgy and cool, I can’t say – but blogging about “the blockchain”* does make me feel a lot like Colin Jost learning Gen Z slang. No cap.
– Liz Dunshee
*It’s just “blockchain” now. “The blockchain” is very 2019.
We last blogged about the Clarity Act back in June. It would be significant for the crypto industry as well as the SEC – among other things, it would establish the SEC’s role in regulating digital assets alongside the CFTC.
The legislation was on the verge of advancing earlier this month, but it fell apart at the 11th hour. This CoinDesk article says that people think the bill will still move forward eventually, but it could be a few months:
One of the individuals following the process said they would not be concerned if the Banking Committee still passed its version of the bill by Memorial Day in late March, and the overall Senate passed the legislation by around July 4. This timeline would still give the House of Representatives enough time to pass the legislation in September or during the lame duck session after this year’s midterm election.
In this blog, the team at Baker McKenzie explains the impact of the delay:
For lawmakers, the choice is unenviable: advance a bill that alienates influential market participants, or delay reform and accept continued regulatory uncertainty. For regulators, the vacuum reinforces reliance on discretionary enforcement and informal guidance. And for courts, it ensures that crypto law will continue to develop incrementally through litigation rather than comprehensive statute.
The Senate Agriculture Committee had been scheduled to vote yesterday on whether an updated version of the CFTC portions of the bill should move forward – but they bumped it to tomorrow due to the snow storm. The vote is now on tap for tomorrow – you can watch the hearing here. This article gives more color on the status of negotiations.
It was clear when former SEC Chair Gary Gensler departed the agency last year that we would see an about-face on crypto. A new Cornerstone Research report shows how that softer touch played out on the enforcement front. This press release highlights a few key findings:
· Of the 13 actions initiated in 2025, five were brought under Chair Gensler before his departure in January. Eight actions were initiated under Chair Atkins, all of which contained allegations of fraud.
· A total of 29 actions were resolved in 2025, seven of which were dismissed by the SEC under Chair Atkins.
· Monetary penalties imposed against digital-asset market participants totaled $142 million in 2025, representing less than 3% of the monetary penalties imposed in 2024.
As I noted elsewhere today, enforcement may be the main hook for crypto until a comprehensive regulatory framework is in place, but it doesn’t seem like the SEC is out to surprise anyone with novel legal theories right now. On the other hand, the same may not be true of state regulators, and that dynamic will be relevant until there’s a federal statute that preempts state law.
I’m happy to be reporting from sunny Coronado this week, for the Northwestern Pritzker School of Law Securities Regulation Institute. It’s pretty easy to be in high spirits when you’re enjoying ocean views. But why stop there? SEC Commissioner Mark Uyeda injected even more energy with his keynote address yesterday.
I interpreted Commissioner Uyeda’s remarks as permission to “dream big” when it comes to the comprehensive review of Regulation S-K that SEC Chair Paul Atkins announced earlier this month. In addition to stating that the Commission needs to refocus on financial materiality with the disclosure framework, Commissioner Uyeda recognized a few pain points that the Staff may review:
There are areas for improvement. For example, with regard to insider trading arrangements and policies under Item 408,[15] we could consider deleting the requirement in subparagraph (b) that mandates companies explain whether they have an insider trading policy or provide reasons if they do not. This would not change any underlying federal securities law obligations or liability thereunder, but would simplify disclosures.
Similarly, with regard to transactions with related persons under Item 404,[16] we could consider adjusting the de minimis threshold of $120,000 to a higher amount, which might better align the requirement with materiality considerations. Or we could consider replacing a static number with a more principles-based approach to materiality that has worked well in other contexts. Additionally, the narrative description of company policies under subparagraph (b) could be replaced with a requirement for companies to file their policies or make them readily available on their websites. This would maintain transparency while streamlining SEC filings.
In the cybersecurity area, we should re-consider our approach to the current mandated disclosures. We should consider whether Item 106[17] could be streamlined to simplify the narrative disclosures of cybersecurity policies and governance oversight. Our disclosure rules should generally not be the driver for what a company does or does not, but disclosure requirements such as these and others are likely shaming or indirectly compelling companies to change practices rather than eliciting material disclosure as to what the company is doing.
There are similar areas for potential improvement in Item 701 and disclosure of unregistered transactions.[18] We could evaluate whether the corresponding Form 10-K item, requiring a 3-year look-back for unregistered sales of securities by the registrant, could be eliminated or otherwise modified.
Simplifications could also be made to Item 201 for disclosures of the number of security holders and performance graphs. Perhaps we could delete the five-year graph of the issuer’s total cumulative return compared to a broad index and a line-of-business or peer group index under subparagraph (e). Given the wide availability of evaluative tools on the internet and mobile devices, do investors continue to need such disclosure?
And although not squarely within the scope of Regulation S-K, I would be remiss if I did not mention disclosure related to mine safety in Form 10-Q.[19] Surely, we can include such disclosure elsewhere than in a recurring quarterly filing—the most logical place would likely be in Form 8-K or Form SD. One important consideration is that each of these requirements feeds into evaluations under an issuer’s disclosure controls and procedures (“DCPs”), adding one more step in terms of identifying whether any transactions or events are reportable.
These are a few examples where we may be able to improve disclosure requirements to ensure they are relevant and efficient in the current regulatory environment. In the aggregate such revisions may reduce compliance burdens, improve our regulatory roadmap and—hopefully, minimize late nights spent by lawyers at public companies having nothing to do with mining but nonetheless wondering if they need DCPs for mine safety incidents.
He also addressed scaled disclosures, noting:
Over 40% of companies (42.5%) must comply with the full scope of the Commission’s disclosure requirements.[22] If the Commission were to reduce this number to approximately 20%, the total number of additional companies that would be able to provide scaled disclosure requirements would increase by almost 1,400.[23] From an investor protection standpoint, however, those 20% of the companies still subject to the full scope of our disclosure requirements would represent almost 93.5% of total market public float.
Commissioner Uyeda floated the notions of recalibrating the size thresholds and time periods for scaled disclosure eligibility, as well as expanding the use of Form S-3.
While this speech was subject to the standard disclaimer of being the Commissioner’s individual views, it’s well-aligned with remarks from Chair Atkins.
