SEC Refinement: “Smaller Companies” Just Got Bigger

The SEC has redefined “small reporting company” in a way that will significantly increase the number of public companies that qualify for less-extensive reporting rules. The SEC estimates that an additional 966 public companies will be eligible for smaller reporting company status in the first year. Previously, to take advantage of the less extensive disclosure rules a company’s public float needed to be under $75 million. Under the new amendments, a company will qualify if its public float is less than $250 million, or it is has less than $100 million in annual revenues and either no public float or a public float of less than $700 million. At the same time, however, the SEC is maintaining existing thresholds for the definitions of “accelerated filer” and “large accelerated filer.” This means some companies will be able to take advantage of the scaled disclosure rules but also be accelerated filers, which means shorter filing deadlines and a requirement to provide a report on their internal controls over financial reporting.