The Securities and Exchange Commission on Thursday voted to change the definition of “smaller reporting company” in an effort to expand the number of companies that qualify for scaled disclosure accommodations.
The new definition enables a company with less than $250 million of publicly held shares to provide scaled disclosures. Previously, the threshold was $75 million.
The expanded definition also includes companies with less than $100 million in annual revenues if they also have either no publicly held shares or public shares of less than $700 million. The prior definition allowed companies to provide scaled disclosure if they had no publicly held shares and less than $50 million in annual revenues.
The rules become effective 60 days after publication in the Federal Register. The SEC estimates that 966 additional companies will be eligible for SRC status in the first year under the new definition.
The SEC established the smaller company category in 2008 to provide general regulatory relief for smaller companies.
— Jack Hagel (Jack.Hagel@aicpa-cima.com) is a JofA editorial director.