Yesterday, the SEC announced that it is proposing amendments to the “accelerated filer” and “large accelerated filer” definitions to “reduce costs without harming investors for certain smaller public companies and, importantly, encourage more companies to enter our public markets.”
Last summer, the SEC adopted amendments to expand the number of smaller reporting companies that qualify for scaled disclosure. Among the adopted amendments was an increase in the public float threshold for smaller reporting companies from $75 million to $250 million. However, when the SEC adopted the higher $250 million threshold, it left the definitions of accelerated filer and large accelerated filer unchanged. As a result, companies with $75 million or more of public float that now qualify as smaller reporting companies under the amended rules still remain subject to the requirements that apply to accelerated filers, including shorter filing deadlines for periodic reports and the requirement that accelerated filers provide an auditor’s attestation of management’s assessment of internal control over financial reporting.
The proposed amendments would:
- Exclude from the accelerated filer and large accelerated filer definitions a company that is eligible to be a smaller reporting company and had no revenues or annual revenues of less than $100 million in the most recent fiscal year for which audited financial statements are available;
- Increase the transition thresholds for an accelerated filer or a large accelerated filer becoming a non-accelerated filer from $50 million to $60 million and for exiting large accelerated filer status from $500 million to $560 million; and
- Add a revenue test to the transition thresholds for exiting both accelerated filer and large accelerated filer status.
After publication of the proposing release in the Federal Register, the proposed amendments will be subject to a 60-day public comment period.
Stay tuned for further updates.