SEC Seeks to Allow More Entities to Qualify as “Smaller Reporting Companies”

SEC HQs 2The Securities and Exchange Commission June 27 proposed to expand the definition of “smaller reporting companies.”  This is an important development as smaller reporting companies using “scaled disclosure” have modified, less stringent, reporting requirements under Regulations S-K and S-X.

Under the proposed changes, registrants with less than $250 million in public float would qualify, as would registrants with zero public float if their revenues were below $100 million in the previous year.

It is important to note that the SEC did not propose changes to the public float thresholds for an “accelerated filer,” currently at $75 million.  However, the SEC is proposing to eliminate the provisions that would exclude “registrants that are eligible to use the smaller reporting company requirements under Regulation S-K for their annual and quarterly reports.”

In other words, an entity that qualifies as smaller reporting company, but has a public float of $75 million or more, would be subject to the same disclosure requirements as accelerated filers.

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