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Change to Smaller Company Definition Expected in Spring 2018

A final rule to expand the smaller reporting company definition could be issued next spring. According to the Office of Budget and Management’s recent update to its rulemaking agenda, the Securities and Exchange Commission (“SEC”) plans to revise the definition to allow more companies to submit fewer disclosures in regulatory filings. Proposed in June 2016, the rule makes businesses with a public float of up to $250 million eligible for the SEC’s reporting requirements under Release No. 33-10107, Amendments to Smaller Reporting Company Definition.

With the current threshold at $75 million, only 32 percent of SEC-registered companies had under $75 million in public float in 2015. The number is a 10 percent drop from 2007, the year when the smaller reporting company definition was established. If the $250 million threshold is approved, 42 percent of public companies would be eligible as smaller reporting companies.

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