United States

SEC Proposes Amendments to Smaller Reporting Company Definition

Jul 01, 2016
From the Financial Reporting Network

The SEC recently proposed rule amendments that would increase the financial thresholds in the definition of smaller reporting company. The revised definition would expand the number of companies that qualify as smaller reporting companies, thereby enabling more companies to qualify for certain existing scaled disclosures in Regulation S-K and Regulation S-X.

The proposal would enable a company with less than $250 million of public float to provide scaled disclosures as a smaller reporting company, as compared with $75 million under the current definition. In addition, if a company does not have public float, it would qualify as a smaller reporting company if its annual revenues are less than $100 million, as compared with the current threshold of less than $50 million in annual revenues.

Once a company exceeds either threshold, it would not qualify as a smaller reporting company again until public float or revenues decrease below a lower threshold. Under the proposal, a company would qualify only if its public float is less than $200 million or, if it has no public float, its annual revenues are less than $80 million.

The SEC did not propose to increase the $75 million threshold in the accelerated filer definition. As a result, companies with $75 million or more of public float that would qualify as smaller reporting companies would be subject to the requirements that apply currently to accelerated filers, including the timing of the filing of periodic reports and the requirement that accelerated filers provide the auditor’s attestation of management’s assessment of internal controls over reporting required by Section 404(b) of the Sarbanes-Oxley Act of 2002.

Comments are due 60 days after the proposed rule is published in the Federal Register.

Read Proposed SEC Rule