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Smaller Reporting Company Changes Proposed

A proposal by the Securities and Exchange Commission (“SEC”) aims to expand the financial thresholds under its definition for “smaller reporting company,” making it easier for companies to qualify for certain scaled disclosures under Regulation S-K and Regulation S-X. The changes would raise the threshold for a smaller reporting company from $75 million to $250 million. In addition, companies without a public float would be allowed to offer scaled disclosures if their annual revenues are below $100 million, which is double the current threshold.

Another proposed change relates to when companies revert from being an accelerated filer back to being a smaller reporting company again. In such cases, a company would qualify as a smaller reporting company again if its public float is below $200 million. If a company has no public float, it can qualify for smaller reporting company again if its annual revenues are below $80 million.

In regard to accelerated filers, the current $75 million threshold will remain as is. Therefore, companies with public float of $75 million or more that would be considered smaller reporting companies will be bound by the requirements accelerated filers must currently meet.

Comments on the smaller reporting company proposal are due 60 days after being published in the Federal Register.

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