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SEC Increases the Number of Companies Eligible for Reduced Disclosure

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Higher Thresholds
Under the amended definition, a company will now be a Smaller Reporting Company if it has a public float of less than $250 million instead of the current $75 million. In addition, a company with a public float of less than $700 million can now also be a Smaller Reporting Company if it has annual revenues of less than $100 million. The SEC staff estimates that the amendments will initially result in an additional 966 companies becoming Smaller Reporting Companies. The amended definition will be effective September 10, 2018.
Accelerated Filer Status
The amendments did not change the current $75 million threshold for “accelerated filer” status. As a result, a Smaller Reporting Company under the new guidelines may remain an accelerated filer based on its public float. Companies with a public float of more than $75 million will continue to be subject to the following requirements applicable to an accelerated filer, among others:
However, SEC Chairman Clayton directed the SEC staff to formulate recommendations for possible changes to the accelerated filer definition to also reduce the number of companies that are accelerated filers.
Calculation of Public Float
The amendments do not change the calculation of a company’s public float or the date as of which it is calculated. A company’s public float continues to be the aggregate worldwide number of shares of voting and non-voting common equity held by non-affiliates multiplied by the price at which the common equity was last sold, or the average of the bid and asked prices of the common equity, in the principal market for the common equity. An Exchange Act reporting company continues to measure its public float as of the last business day of its most recently completed second fiscal quarter to determine whether it is a Smaller Reporting Company.
Subsequent Qualification as a Smaller Reporting Company
The amendments also changed the thresholds for when a company will subsequently become a Smaller Company – if it is not currently one – because it exceeds the applicable thresholds. A company that had a public float of more than $250 million will subsequently become a Smaller Reporting Company if its public float is less than $200 million. A company that had a public float of $700 million or more and annual revenues of $100 million or more will subsequently become a Smaller Reporting Company if it has both a public float of less than $560 million and annual revenues of less than $80 million. If a company had…

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