Exemption from Section 5(c) for Certain Communications by Well-Known Seasoned Issuers
SEC Rule 163, codified at 17 C.F.R. § 230.163 under the Securities Act of 1933, exempts from Section 5(c)'s pre-filing prohibition on offers any oral or written communication made by or on behalf of a well-known seasoned issuer — other than by underwriters and dealers — at any time before a registration statement relating to a public offering of the issuer's securities has been filed.
The exemption is the most commercially significant pre-filing communications right available under the Securities Act, enabling WKSIs to make genuine offers — including through free writing prospectuses that specifically identify the securities to be offered and the terms of the contemplated transaction — before the formal registration statement filing process has commenced, subject to a required legend, a post-filing obligation to file the pre-filing communications with the Commission, and the continuing obligation to conduct the offering through a registration statement when it does proceed.
Rule 163 is one of the foundational provisions of the well-known seasoned issuer framework introduced in the 2005 Securities Offering Reform — a framework that recognised that the largest, most established, and most widely followed public companies operate in an efficient market environment where investor and analyst familiarity with the issuer makes the strict pre-filing communications prohibition an unnecessary constraint rather than a meaningful investor protection measure.
Overview and Regulatory Purpose
Section 5(c) of the Securities Act prohibits any person from making any offer to sell or offer to buy a security through interstate commerce or the mails unless a registration statement relating to such security has been filed with the Commission.
This pre-filing prohibition — commonly described as the core component of the gun-jumping framework — was designed to prevent issuers from conditioning the market for a forthcoming registered offering through communications that would reach investors before the formal disclosure document had been filed and was subject to Commission review.
In the regulatory environment of 1933, when most securities offerings were conducted by companies without established Exchange Act reporting histories and without active secondary market trading, the pre-filing communications prohibition served a genuine investor protection function by ensuring that investors received no marketing communications about a forthcoming offering until the registration statement's substantive disclosure was available for review.
By 2005, however, the major public companies that constitute the WKSI universe were operating in a fundamentally different information environment. These companies — characterised by their substantial public floats, deep Exchange Act reporting histories, broad institutional and retail analyst coverage, and active secondary market trading — were already among the most thoroughly documented and widely analysed enterprises in the global economy.
The information asymmetry that Section 5(c)'s pre-filing prohibition was designed to address largely did not exist for these companies: investors considering whether to participate in a WKSI offering had access to years of quarterly and annual reports, current event disclosures, analyst coverage, rating agency assessments, and secondary market price discovery that collectively provided a far richer information set than any individual offering registration statement.
The Commission's determination in the 2005 Securities Offering Reform was that imposing the full pre-filing communications prohibition on this class of issuer served no meaningful investor protection purpose — and indeed imposed commercial costs on efficient capital formation — that would not be equally well served by allowing pre-filing communications subject to appropriate conditions protecting investors' ability to access the registration statement once filed.
Statutory Authority and Rulemaking History
Rule 163 derives its statutory authority from Section 5(c) of the Securities Act of 1933 — the pre-filing prohibition from which the rule's exemption operates — and Section 19(a)'s general rulemaking authority. The Commission adopted Rule 163 on August 3, 2005, in Securities Act Release No. 33-8591, the landmark Securities Offering Reform rulemaking.
The December 2009 revision — Securities Act Release No. 33-9089, published at 74 FR 68334, December 28, 2009 — modified certain filing conditions and legend requirements within the rule without altering its fundamental pre-filing exemption architecture. No substantive amendments have been made to Rule 163 since December 2009, and no pending rulemaking proposes changes through June 2026.
The May 2026 Registered Offering Reform proposal — which would extend certain WKSI-equivalent communication and registration benefits to a broader population of Exchange Listed Issuers — does not propose to amend Rule 163's operative text but would, if adopted, expand the population of issuers entitled to the enhanced pre-filing communications framework that Rule 163 provides exclusively to WKSIs under the current structure.
Key Provisions and Operative Requirements
Rule 163(a) establishes the core exemption. Offers made by or on behalf of a well-known seasoned issuer in connection with an offering that will be registered under the Securities Act, other than by an offering participant who is an underwriter or dealer acting in that capacity, at any time prior to the filing of a registration statement covering such offering, will be deemed not to violate Section 5(c) of the Act.
This exemption is absolute in terms of timing — it is available at any time before filing, without any requirement that the issuer's registration statement be filed within a specified period following the pre-filing communication, and without any requirement that the communication be limited to categories of information that are less sensitive from a gun-jumping perspective.
A WKSI may, under Rule 163, make a genuine offer — specifying the security to be offered, its approximate terms, and the issuer's intention to conduct the offering — before any registration statement has been filed, in a manner that no non-WKSI issuer may do under any other provision of the Securities Act's communications framework.
Rule 163(a) carves out underwriters and dealers from the exemption's scope, confirming that the pre-filing communications freedom Rule 163 provides extends only to the issuer and persons speaking on its behalf other than underwriters and dealers acting in that capacity. This exclusion prevents the rule from being used to create a vehicle through which underwriters — who are specifically subject to the registration process's limitations on their marketing activities — could bypass those limitations by acting purportedly on behalf of the issuer in conducting pre-filing marketing activities that they could not themselves conduct as underwriters.
Rule 163(b) establishes the conditions applicable to written communications made in reliance on the exemption. Written communications that constitute offers in reliance on Rule 163's exemption are free writing prospectuses as defined in Rule 405, and are subject to two specific conditions. First, every written communication that is an offer made in reliance on the exemption must contain a specified legend.
The required legend must state substantially: The issuer may file a registration statement, including a prospectus, with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov.
The legend may also provide an email address at which documents can be requested and may indicate that the documents are available on the issuer's website.
The rule provides a materiality-based cure for immaterial or unintentional legend omissions: where the legend is omitted or incorrect through an immaterial error or unintentional omission, the exemption is not lost if the issuer made a good faith and reasonable effort to comply, the free writing prospectus is amended to include the correct legend as soon as practicable after discovery, and the corrected free writing prospectus is retransmitted by substantially the same means to substantially the same prospective purchasers.
Second, every written communication that is an offer made in reliance on the exemption must be filed by the issuer with the Commission promptly upon the filing of the registration statement — or amendment — covering the securities that were offered in reliance on the exemption. Where no registration statement is filed, no filing obligation arises for the pre-filing communication itself, but if the issuer proceeds to register the contemplated offering, all Rule 163 free writing prospectuses from the pre-filing period must be filed at that time.
Electronic road shows — road show communications that are free writing prospectuses within the meaning of Rule 405 — are excepted from the filing obligation where a bona fide electronic road show satisfying the conditions of Rule 433's comparable exception is made available without restriction, allowing WKSIs to conduct pre-filing electronic road show presentations without creating a comprehensive EDGAR filing record of those presentations.
Rule 163(c) defines what constitutes a communication made by or on behalf of an issuer for purposes of Rule 163. A communication is made by or on behalf of an issuer if the issuer, or an agent or representative of the issuer other than an offering participant who is an underwriter or dealer, authorises or approves the communication before it is made.
This definition is significant because it determines the scope of the exemption's benefit and its conditions — communications authorised or approved by the issuer before they are made are attributed to the issuer under Rule 163, with the consequence that they carry both the exemption's protection from Section 5(c) liability and the rule's conditions of legend inclusion and post-filing filing obligation.
Scope of Application
Rule 163 is available exclusively to well-known seasoned issuers as defined in Rule 405 — the subset of Exchange Act reporting companies with a minimum of $700 million in public common equity float, or that have issued at least $1 billion in aggregate principal amount of non-convertible securities in the preceding three years.
This exclusivity is intentional and reflects the Commission's determination that the combination of market familiarity, reporting history, and investor sophistication that justifies relaxing the pre-filing communications prohibition exists specifically for the WKSI class and does not extend to other categories of reporting company that might similarly benefit from greater communications freedom in the offering context.
Ineligible issuers — as defined in Rule 405 to include blank check companies, shell companies other than business combination related shell companies, issuers with recent antifraud-related proceedings, and certain other categories of heightened risk issuer — are excluded from WKSI status and therefore from Rule 163's exemption, notwithstanding any other characteristics that might otherwise suggest sophistication or market following.
The exemption applies to oral communications as well as written communications, without imposing any legend or filing conditions on oral pre-filing offers — the legend and filing conditions of Rule 163(b) apply specifically to written communications.
A WKSI may therefore discuss an anticipated offering with institutional investors through telephone conversations, video conferences, or in-person meetings before any registration statement has been filed, without any legend or filing obligation, subject only to the general antifraud provisions of the Securities Act and the Exchange Act that apply to all communications regardless of the applicable gun-jumping framework.
Relationship to Related Rules and Regulations
Rule 163 is the pre-filing counterpart to Rule 433's post-filing free writing prospectus framework. Where Rule 163 exempts pre-filing communications from Section 5(c)'s prohibition, Rule 433 establishes the conditions under which post-filing free writing prospectuses satisfy Section 10(b)'s requirements and therefore satisfy Section 5(b)(1)'s requirement that transmitted prospectuses meet Section 10's standards.
Together Rules 163 and 433 define the complete free writing prospectus communications timeline for WKSIs — Rule 163 governs the pre-filing period and Rule 433 governs the post-filing period — with Rule 164 providing the legal mechanism through which Rule 433-compliant post-filing free writing prospectuses become Section 10(b) prospectuses satisfying Section 5(b)(1).
Rule 163's WKSI-exclusive pre-filing communications framework connects directly to Rule 405's WKSI definition and to Rule 462(e)'s automatic effectiveness mechanism for automatic shelf registration statements filed by WKSIs.
The WKSI status that qualifies an issuer for Rule 163's pre-filing communications freedom is the same status that entitles the issuer to file an automatically effective automatic shelf registration statement, use Rule 413(b) to add securities to an effective shelf by post-effective amendment, and conduct shelf takedowns from an effective registration statement without any waiting period. Rule 163 is therefore not an isolated communications accommodation but a component of the comprehensive offering flexibility package that WKSI status provides across the entire registered offering framework.
Rule 163's legend requirement — directing pre-filing communication recipients to EDGAR and the forthcoming registration statement — directly parallels the EDGAR legend required under Rule 433(c) for post-filing free writing prospectuses, ensuring consistent investor guidance about how to access formal disclosure documents throughout the full timeline of the offering communications process.
Amendment History and Regulatory Evolution
Rule 163's substantive pre-filing WKSI communications framework has been stable since its 2005 adoption, with the December 2009 amendment making targeted adjustments to the filing conditions and legend requirements without altering the fundamental exemption from Section 5(c)'s pre-filing prohibition.
The rule's core design — unrestricted pre-filing communications freedom for WKSIs and their authorised representatives other than underwriters and dealers, subject to a required legend on written communications and a post-filing filing obligation — has remained unchanged across the rule's two decades of operation.
The May 2026 Registered Offering Reform proposal's potential expansion of certain WKSI-equivalent benefits to Exchange Listed Issuers represents the most significant development in the surrounding regulatory landscape since the rule's adoption, but the proposal does not specifically address Rule 163's text and would implement expanded pre-filing communication rights through a different regulatory mechanism rather than by amending Rule 163's WKSI-exclusive framework.
Enforcement Context and SEC Action Patterns
Rule 163 enforcement arises primarily in the context of issuers that have made pre-filing offering communications without qualifying as WKSIs — cases where an issuer that did not satisfy Rule 405's WKSI definition nevertheless made written communications constituting offers before a registration statement was filed, relying on Rule 163 without a valid basis for doing so.
The Division of Corporation Finance monitors compliance with Rule 163's WKSI eligibility requirement through its review of registration statements filed following pre-filing offering activity and through its examination of free writing prospectuses filed pursuant to Rule 163(b)'s post-filing filing obligation.
The Commission has confirmed through C&DI guidance that an issuer's WKSI status for Rule 163 purposes is determined at the time of the pre-filing communication rather than at the time the registration statement is subsequently filed, and that an issuer whose WKSI status lapses between the pre-filing communication and the registration statement filing may not retroactively lose the exemption for pre-filing communications made when it did qualify as a WKSI, provided those communications were consistent with Rule 163's conditions at the time they were made.
Examination Relevance and Key Takeaways
Rule 163 is examined at the Series 65 level in the context of the WKSI offering framework and the pre-filing communications rights available to the largest and most established public companies. The fundamental distinction between Rule 163's pre-filing exemption — available only to WKSIs, at any time before filing, without timing or content limitations — and Rule 135's pre-filing notice safe harbour — available to all issuers but limited to specified categories of basic identifying information — is consistently examined as the key contrast in the pre-filing communications landscape.
The legend requirement for written pre-filing communications and the post-filing obligation to file those communications with the Commission are the primary conditions examined alongside the WKSI eligibility requirement.
The key points to retain are these. Rule 163 exempts from Section 5(c)'s pre-filing gun-jumping prohibition all oral and written offers made by or on behalf of a WKSI — other than by underwriters and dealers acting in that capacity — at any time before a registration statement relating to a public offering has been filed.
Written communications made in reliance on Rule 163 are free writing prospectuses that must contain a specified legend directing recipients to EDGAR and the forthcoming registration statement, with a materiality-based cure for immaterial or unintentional legend omissions.
Every written Rule 163 communication must be filed with the Commission promptly upon the filing of any registration statement covering the offered securities, subject to the electronic road show exception. A communication is made by or on behalf of the issuer if the issuer or its agent or representative other than an underwriter or dealer authorises or approves it before it is made. Rule 163 is the pre-filing component of the WKSI free writing prospectus communications framework, paired with Rule 433's post-filing conditions and Rule 164's legal mechanism for post-filing free writing prospectuses.
Rule 163 was last substantively amended December 2009 and no amendments are pending through June 2026.
