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SEC Proposes Amendments to Definition of ‘Smaller Reporting Company’

On June 27, the Securities and Exchange Commission proposed amendments to the definition of “smaller reporting company,” which would increase certain financial thresholds in such definition. Smaller reporting companies are permitted to, among other things, provide scaled disclosures under the SEC’s Regulation S-K and Regulation S-X.

Specifically, the proposed amendments would revise the definition of “smaller reporting company” to permit a company to provide scaled disclosures if it has:

  • a public float of less than $250 million (as compared to the current threshold of $75 million); or

  • no public float and annual revenues that are less than $100 million (as compared to the current threshold of less than $50 million)

In addition, the proposed amendments provide that a company that ceases to qualify as a smaller reporting company (as a result of its exceeding one of the thresholds above) would not qualify again as such until its public float is less than $200 million or, if the company does not have a public float, its annual revenues are less than $80 million.

The proposed amendments do not presently propose to amend the financial thresholds applicable to “accelerated filer” status. The proposed amendments would, however, adjust the definition of “accelerated filer” to eliminate the provision that excludes registrants that are eligible to use the smaller reporting company requirements under Regulation S-K for their annual and quarterly reports. Accordingly, as noted in the SEC’s press release, 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 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.

SEC Chair Mary Jo White noted in the SEC’s press release announcing the proposed amendments that “[r]aising the financial thresholds in the smaller reporting company definition is intended to promote capital formation and reduce compliance costs for smaller companies while maintaining important investor protections.”

The SEC is soliciting public comment on the proposed amendments, and the comment period expires on August 30.

The SEC’s proposed amendments can be read here.

The SEC’s press release can be read here.

 

©2021 Katten Muchin Rosenman LLPNational Law Review, Volume VI, Number 190
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About this Author

Mark D. Wood, corporate securities lawyer Katten Muchin Chicago Law firm
Partner

Mark D. Wood is head of Katten's Securities practice and concentrates in corporate and securities law. Mark represents public companies, issuers and investment banks in initial public offerings (IPOs) and other public offerings, private investment in public equity (PIPE) transactions, debt securities and other securities matters.

Mark also represents clients in complex corporate transactions, including tender offers, mergers, acquisitions, dispositions, going-private transactions, private equity investments, joint ventures and...

312-902-5493
Mark Reyes Securities Lawyer Katten Muchin law firm Chicago office
Partner

Mark J. Reyes concentrates his practice in corporate and securities matters, including representing issuers and investors in public offerings and private placements of equity and debt securities and advising clients in complex corporate transactions such as mergers, acquisitions, private investments in public equity (PIPEs), private equity investments and joint ventures. He also counsels public companies on securities law compliance, disclosures and corporate governance matters.

Shown below is a...

312-902-5612
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