The Securities and Exchange Commission has proposed amendments to make it easier for some large companies to communicate with broader groups of potential investors and gauge the level of interest in the market for their securities offerings.

Proposed amendments to Rule 163 under the Securities Act would allow companies that are "well-known seasoned issuers" to authorize an underwriter or dealer to communicate with potential investors on their behalf about potential securities offerings prior to filing registration statements.

WKSIs are issuers that are current and timely in their Exchange Act reports for at least a year and have either $700 million of publicly-held shares or have issued $1 billion of non-convertible securities, other than common equity, in registered offerings for cash in the preceding three years.

The SEC adopted Rule 163 as part of its 2005 Securities Offering Reform to allow WKSIs to engage in unrestricted oral and written offers before a registration statement is filed without violating the Act's "gun-jumping" provisions.

Currently under Rule 163, only WKSIs are permitted to communicate directly with potential investors before filing a registration statement.

Rule 163 exempts an offer made "by or on behalf of" a WKSI from the prohibition in Section 5(c) of the Securities Act on offers to sell, offers for sale, or offers to buy an issuer's securities before the filing of a registration statement, so long as the conditions of the rule are met.

The SEC is proposing to amend the "by and on behalf of an issuer" definition so that, under certain circumstances, underwriters or dealers can be agents or representatives of WKSIs under the rule. The change aims to encourage more capital raising through registered offerings rather than private offerings.

At the time it adopted Rule 163, the SEC estimated that most WKSIs would have an automatic shelf registration statement on file and wouldn't rely on the exemption provided in the rule.

However, the SEC noted in the proposing release that many WKSIs don't have automatic shelf registration statements on file or don't have the securities they propose to offer already included in their filed registration statements.

As proposed, an underwriter or dealer could act as an agent or representative of a WKSI under the following conditions: The underwriter or dealer receives written authorization from the WKSI to act as its agent or representative before making any communication on its behalf; the WKSI authorizes or approves any written or oral communication before it's made by an authorized underwriter or dealer, and any authorized underwriter or dealer that's made any authorized communication on behalf of the issuer in reliance on Rule 163 is identified in any prospectus contained in the registration statement filed for the offering to which the communication relates. All other current requirements of Rule 163 would still apply, including the requirement that all communications made by or on behalf of the WKSI in reliance on the rule would be subject to Regulation FD.

Public comments on the proposed amendments are due 30 days after publication in the Federal Register.

Among other things, the proposing release seeks comment on the extent to which the amendments would enable WKSIs to reach a broader group of investors and affect their ability to raise capital through registered offerings; whether any other modifications to the conditions of Rule 163 should be made, and whether the proposed amendments would have any other effects on WKSIs' ability to raise capital.

The SEC also asks about the proposals' affect on issuers' decision to file an automatic shelf registration statement and whether to limit the types of investors that an authorized underwriter or dealer could approach under the rule.