We thought you may find of interest prepared remarks by SEC Chairman Jay Clayton at the annual Government-Business Forum on Small Business Capital Formation held on November 30, 2017, where he stated, "In the coming months I anticipate that the Commission will consider adopting rules to expand the definition of 'smaller reporting company' to permit additional companies to avail themselves of scaled disclosure requirements." A full transcript of the speech is available at the SEC's website.
Proposed Rules Would Change Qualifications for Smaller Reporting Companies
As you may recall, in July 2016 the SEC voted to propose 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. The SEC did not, however, propose to increase the $75 million threshold in the "accelerated filer" definition.
As a result, under the proposed rules, a company with a public float between $75 million and $250 million would qualify as a smaller reporting company for scaled disclosure purposes but would be subject to other filing requirements that currently apply to accelerated filers, including the 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 reporting required by Section 404(b) of the Sarbanes-Oxley Act of 2002.
Recall also that, exclusive of any scaled disclosure permitted due to a company's classification as a smaller reporting company, a company may also be classified as an "emerging growth company" and take advantage of certain reduced disclosure requirements pursuant to the Jumpstart Our Business Startups Act of 2012 (JOBS Act), some of which overlap with smaller reporting companies and others that offer additional disclosure relief.
To continue reading this article on the firm's Securities Law Exchange blog, please click here to read the disclosure requirement breakdown for smaller reporting companies and EGCs.
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