On June 27, 2016, the SEC voted to propose amendments that would increase the financial thresholds in the “smaller reporting company” definition. By expanding the number of companies that qualify as smaller reporting companies, the proposal is intended to “promote capital formation and reduce compliance costs for smaller companies” according to SEC Chairman Mary Jo White. Smaller reporting companies may qualify for scaled disclosures provided in Regulations S-K and Regulations S-X.
The proposed rules would enable a company with less than $250 million of public float to provide scaled disclosure as a smaller reporting company, as compared to the $75 million threshold under the current definition. If a company does not have a public float, it would be permitted to provide scaled disclosures if its annual revenues are less than $100 million, as compared to the current threshold of less than $50 million in annual revenues.
It is important to note, however, that the SEC is not proposing to increase the $75 million threshold in the “accelerated filer” definition. As a result, smaller reporting companies with $75 million or more of public float will be subject to accelerated filer requirements.
The SEC press release is available at: http://www.sec.gov/news/pressrelease/2016-131.html and the proposed rule is available at: https://www.sec.gov/rules/proposed/2016/33-10107.pdf.