The SEC expanded the definition of "smaller reporting company" ("SRC") to increase the number of companies that qualify for certain scaled disclosure accommodations under Regulation S-K and Regulation S-X.
According to the SEC Fact Sheet, the expansion of the number of qualifying registrants is intended to promote capital formation and reduce compliance costs. Under the proposed amendments, the SRC threshold will be raised to include (i) companies with less than $250 million (previously $75 million) of public float and (ii) companies with less than $100 million (previously $50 million) in annual revenue if they do not have public float or if the public float is less than $700 million.
The amendments will not alter the "accelerated filer" or "large accelerated filer" threshold, which exempts certain smaller companies from auditor attestation requirements. SEC Chair Jay Clayton instructed SEC staff to review and issue recommendations on amending the "accelerated filer" threshold of companies with $75 million or more of public float in order to reduce the number of companies that qualify.
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