SEC Seeks to Let More Companies Use ‘Scaled Disclosure'

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By Rob Tricchinelli

June 27 — The Securities and Exchange Commission proposed June 27 to allow more entities to qualify as “smaller reporting companies” that face less stringent disclosure requirements (RIN:3235-AL90).

Smaller reporting companies don't have to provide as much financial history or corporate governance information as larger issuers do.

The proposal would allow a company with less than $250 million of public float to use “scaled disclosures,” up from the current $75 million level. Companies without public float would qualify for the scaled disclosure mandates under the proposal if their annual revenues are less than $100 million, up from $50 million now.

“Raising the financial thresholds in the smaller reporting company definition is intended to promote capital formation and reduce compliance costs for smaller companies while maintaining important investor protections,” SEC Chairman Mary Jo White said in a news release.

‘Scaled Disclosure.'

Smaller reporting companies using “scaled disclosure” may omit from SEC filings compensation analysis, executive risk management policies, executive pay ratios, stock performance charts and disclosure about market risk.

They may also provide shorter histories of their business description, management discussion and analysis—known as “MD&A”—executive compensation, income, cash flow and stockholder equity.

Once a company surpasses the smaller reporting threshold, it may not qualify again for the easier requirement unless it falls below a lower level. The SEC proposed to set those levels at $200 million in public float or $80 million in annual revenue for companies without public float.

The comment period on the proposal is 60 days. The change was proposed without the agency holding an open meeting.

To contact the reporter on this story: Rob Tricchinelli in Washington at

To contact the editor responsible for this story: Phyllis Diamond at

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