SEC Expands Companies Eligible for Scaled Disclosure

By Randi Morrison posted 06-28-2018 12:11 PM

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At its open meeting today, the SEC adopted amendments to the “smaller reporting company” (SRC) definition to expand the number of companies that qualify for certain existing scaled disclosure accommodations. The new SRC definition enables companies with less than $250 million of public float to provide scaled disclosures, vs. the $75 million threshold under the prior definition. It also includes companies with less than $100 million in annual revenues if they also have either no public float or a public float that is less than $700 million; the prior definition's revenue test allowed companies to provide scaled disclosure only if they had no public float and less than $50 million in annual revenues.

SEC staff estimates that 966 additional companies will be eligible for SRC status in the first year under the new definition, including 779 companies with a public float of $75 million or more and less than $250 million; 161 companies with a public float of $250 million or more and less than $700 million and revenues of less than $100 million; and 26 companies with no public float and revenues of $50 million or more and less than $100 million.

See the SEC's release and Fact Sheet; these Statements from SEC Chair Clayton and Commissioners Peirce, Piwowar, Stein and Jackson; these posts from Cooley, Dorsey and Stinson Leonard Street; these articles from Crowdfund Insider and CFO.com; and our 2016 report: "SEC Proposes Amendments to "Smaller Reporting Company" Definition." See also Reg S-K Item 10(f) and Reg S-X Article 8 for more on the SRC scheme, the SEC's release on the several additional rules and proposals it considered at the meeting, and additional information and resources on our Disclosure Reform and Small Company pages.

The new SRC rules will become effective 60 days after publication in the Federal Register.

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