Funds Talk
July 02, 2018

SEC Amends Definition of ‘Smaller Reporting Company’ Expanding the Number of Companies Eligible for Reduced Disclosure

On June 28, 2018, the Securities and Exchange Commission voted to amend the definition of “smaller reporting company” (SRC) to expand the number of companies eligible to take advantage of the reduced disclosure requirements applicable to SRCs, including certain financial data required under Items 301 and 302 of Regulation S-K, market risk disclosure, compensation discussion and analysis, and compensation committee report.

Under the amendment, a company that is not an investment company, an asset-backed issuer or a majority-owned subsidiary of a parent company that is not an SRC and is either (1) a company with a public float of less than $250 million as of the last business day of its most recently completed second fiscal quarter or (2) a company with a public float of less than $700 million and with less than $100 million of annual revenue during the most recently completed fiscal year for which audited financial statements are available or a nonpublic company, will qualify as an SRC. Prior to the amendment, only companies with a public float of less than $75 million or nonpublic companies with less than $50 million of annual revenue could qualify as an SRC. 

If an SRC loses its SRC status, it can re-qualify as an SRC if it has a public float of less than $200 million or if it has less than $80 million of annual revenue and a public float of less than $560 million.

These amendments do not change the threshold in the definitions of “accelerated filer” and “large accelerated filer.” As a result, an SRC that is also an accelerated filer or large accelerated filer is still required to comply with the timing requirements applicable to the annual and quarterly reports required by such filers.  The Securities and Exchange Commission has begun to formulate recommendations to amend these definitions that would reduce the number of companies that qualify as accelerated filers. 

The Securities and Exchange Commission estimates that 966 additional companies will be eligible for SRC status in the first year under the amended definition. 

The amendments will become effective 60 days after publication in the Federal Register.

Authors and Editors

You may also be interested in

  • Funds Talk
    July 02, 2018
    Funds Talk: July 2018

    Topics covered in this issue include: Permanent Capital Vehicles, Leveraged Lending Guidance, SRCs, Liquidity Disclosure Rules, CDS Strategies, Martin Act Claims

    Read More
  • Infographics
    June 27, 2018
    Opportunities in Permanent Capital Vehicles
    Read More
  • Funds Talk
    July 02, 2018
    Comptroller of the Currency Announces That Leveraged Lending Guidance Is Not Expected to Be Changed
    Read More
  • Funds Talk
    July 02, 2018
    SEC Amends Definition of ‘Smaller Reporting Company’ Expanding the Number of Companies Eligible for Reduced Disclosure
    Read More
  • Client Alerts
    June 28, 2018
    SEC Acts on Liquidity Disclosure Rules and Proposes Easing Regulation of ETF Launches
    Read More
  • Debt Dialogue
    June 06, 2018
    Opportunistic CDS Strategies Available to CDS Protection Sellers Part I: An Introduction
    Read More
  • Debt Dialogue
    June 06, 2018
    Opportunistic CDS Strategies Available to CDS Protection Sellers Part II: McClatchy and Sears
    Read More
  • Client Alerts
    June 19, 2018
    New York’s High Court Holds That Three-Year Statute of Limitations Applies to Martin Act Claims, Trimming the State’s Securities Law
    Read More

Related Practices

We use cookies on this website to optimize user experience and site functionality and to give you the best possible experience. We do so with your approval. The choice is up to you. Learn more.