United States

Proposed amendments to smaller reporting company definition


Under the SEC’s rules and regulations, smaller reporting companies are eligible to provide certain scaled disclosures. As currently defined, smaller reporting companies generally are registrants with:

  • Less than $75 million in public float as of the last business day of their most recently completed second fiscal quarter; or
  • Zero public float and annual revenues of less than $50 million during the most recently completed fiscal year for which audited financial statements are available.

The SEC recently proposed amendments that would increase the financial thresholds in the “smaller reporting company” definition. The proposed rules would enable a company with less than $250 million of public float to provide scaled disclosures as a smaller reporting company, as compared to the $75 million threshold under the current definition. In addition, if a company does not have 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.

As in the current rules, once a company exceeds either of the thresholds, it will not qualify as a smaller reporting company again until public float or revenues decrease below a lower threshold. Under the SEC’s proposal, a company would qualify only if its public float is less than $200 million or, if it has no public float, its annual revenues are less than $80 million.

It should be noted that the SEC is not proposing to increase the $75 million threshold in the “accelerated filer” definition. As a result, companies with $75 million or more of public float that would qualify as smaller reporting companies would be subject to the requirements that apply currently to accelerated filers, including the accelerated timing of the filing of periodic reports and the requirement that accelerated filers provide the auditor’s attestation of management’s assessment of internal controls over financial reporting required by Section 404(b) of the Sarbanes-Oxley Act of 2002.

The Amendments to Smaller Reporting Company Definition are available for comment for 60 days after publication in the Federal Register.